The borrower of record is Towne Center Venture LLP, which consists of three family partnerships that own and develop land in Conroe, a suburb north of Houston. The loan replaces construction financing from Compass Bank in Houston.
From a lending standpoint, Brant C. Smith, a Houston director for Holliday Fenoglio Fowler LP, tells GlobeSt.com, that AIG fully funded the loan even though a 10,000-sf Pier 1 and 30,100-sf Best Buy are still under construction. He says construction will wrap up in March. The pair's strong credit and rest of the tenant base in a 98%-leased asset convinced the lender to go ahead and close the deal.
The 20-year loan, which fully amortizes over the term, has a sub-6% fixed-interest rate. The loan-to-value ratio is 60%.
Smith says all major leases, inline and ground agreements, have terms of 10 years or more. Ground leases are held by Home Depot for a 111,847-sf store, and Target, 118,000 sf. Inline tenants with long-term leases include Office Depot, Starbucks and Bank One plus the soon-to-open Pier 1 and Best Buy. The two-year-old center is situated on 40 acres at the corner of Texas 105 and Interstate 45 South. According to Smith, the developer might add 10,000 sf to 20,000 sf to the inline total in the future.
"Towne Center South has been able to maintain high occupancy levels despite flat retail market conditions. This is in part due to its excellent location, which has a growing population, expanding professional facilities, first-class regional medical centers and prestigious neighborhoods," Smith said in a press release.
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