ACRES Originates $89M Construction Loan for Houston Multifamily PropertyAUGUST 10, 2021
The Hawthorne, a 17-story, ground-up construction condominium project, will be located in Houston’s upscale Galleria neighborhood
HOUSTON – (August 9, 2021) – ACRES Capital Corp. (together with its subsidiaries, “ACRES”), a leading commercial real estate middle-market lender, has originated an $89 million loan to fund the construction of The Hawthorne (the “Property”), a 17-story, 67-unit condominium building located at 5656 San Felipe Street in Houston, Texas. The loan is provided to sponsors Pelican Builders (“Pelican”), a Houston-based development company focused on residential projects that has been active in the area for more than 40 years; and Ranman USA (“Ranman”), a leading investment firm focused on the residential housing sector in the center of the U.S. The loan carries an initial term of 36 months.
“As Houston experiences one of the hottest housing markets its ever seen, The Hawthorne’s high-end condominiums will meet the demand for new living optionality and provide an alternative to traditional, single-family homes,” said ACRES Chief Executive Officer and President Mark Fogel. “The brand-new Property will be an especially attractive choice for empty-nesters in the Galleria submarket looking to downsize without leaving the area. Texas, and Houston in particular, have been direct beneficiaries of strong population growth in the country’s Sunbelt region, which we don’t see slowing down as people continue to seek a higher quality of life and more breathing room.”
The Hawthorne will feature 67 units totaling 164,546 net-sellable square feet with an additional 19,712 square feet of outdoor space, as well as 178 parking spaces and 67 storage units. On-site amenities will include a 67-foot pool with surrounding cabanas, state-of-the-art fitness center, dog park and washing station, resident lounge, guest suites available for rental, terrace spaces, 24-hour concierge service and more. In-unit features will include 10-foot ceilings, hardwood flooring, double-glazed aluminum windows and high-end appliances.
Derek Darnell, President of Pelican, stated, “It was a pleasure working with the ACRES team, who provided Pelican and our partners with a creative and flexible financing package that will help us realize our business plan for the Property. We look forward to leveraging our expertise as a prominent residential developer in the local market to create a unique, luxury housing option for Houston residents.”
The Houston area has recently seen a major uptick in residential sales, with 2021 home sales running 17 percent ahead of 2020’s record pace. The Galleria submarket lies in proximity to single-family home neighborhoods including Tanglewood, River Oaks and Memorial, as well as numerous shopping, dining, hospitality and entertainment destinations. What’s more, the area is home to more than 28 million square feet of commercial office space, which accounts for approximately 15 percent of Houston’s total class-A office space.
“This was a challenging construction loan to arrange given that it fell amid the COVID-19 pandemic. Ultimately, it came down to having a great project and premier sponsorship. ACRES was wonderful to work with and stuck with the financing during a difficult time,” stated Steven Buchwald, Senior Managing Director at Mission Capital Debt and Equity, part of Marcus and Millichap Capital Corp., who arranged the loan.
The deal was originated by Drew Miller of ACRES’ New York office.