Cushman & Wakefield has arranged $95.74 million in financing for a two-property Texas apartment portfolio owned by Sundance Bay.
The financing consists of $76.24 million in senior debt provided by Benefit Street Partners and a $19.5 million mezzanine loan from CCL Capital.
The portfolio includes 626 apartments across Grove East in Humble and Rowlett Station in Rowlett.
Grove East is a 324-unit, garden-style apartment community completed in 2021. It was approximately 93% occupied when the financing closed.
The property is located near Generation Park, a 4,300-acre master-planned development within a growing Houston-area employment corridor.
Rowlett Station is a 302-unit, mid-rise community completed in 2021. It was approximately 92% occupied at closing and is located next to a Dallas Area Rapid Transit Blue Line station providing rail access to downtown Dallas.
Both properties are subject to Housing Finance Corporation income and rent restrictions.
HFC structures can provide tax or financing benefits in exchange for reserving part of a property for qualifying residents and limiting rents. Those restrictions added regulatory and documentation requirements to the financing.
The capital structure also involved dividing the debt between a senior lender and a mezzanine lender.
Senior debt has the first claim against the property if the borrower defaults. Mezzanine financing carries greater risk and generally has a higher cost because it is repaid after the senior loan.
Sundance Bay believes both properties have opportunities to increase revenue through operational improvements and potential changes to existing rent restrictions.
Chase Johnson and Caleb Riebe led Cushman & Wakefield’s Texas Equity, Debt and Structured Finance team on the transaction.
KEY QUOTE:
“Between the HFC consent requirements on both assets, bifurcating the capital stack across a senior lender and a mezz lender simultaneously, and doing all of it in a complex credit environment, there were a lot of moving parts.”
Chase Johnson, Managing Director at Cushman & Wakefield
