Newmark Knight Frank (NKF) has announced that Debt and Structured Finance Director Spencer Hough, along with Executive Managing Director Tip Strickland, have closed financing on an industrial portfolio totaling approximately 222,000 square feet and a multifamily portfolio totaling 58,135 square feet, both located in the Houston metropolitan area.
Totaling 17 buildings, the flex industrial portfolio consists of Enterprise Park, a 153,835-square-foot, 14-building flex industrial service center located at the southeast corner of Corporate Drive and Town Park Drive in Houston’s Southwest industrial submarket, and Town and Country Center, a 67,928-square-foot, three-building flex industrial service center located at the northeast corner of Sam Houston Tollway and Shadow Wood Drive in the West Houston/Outer submarket. NKF represented the borrower, private investor CPM Holdings, LLC. The transaction was financed by St. Louis-based Reinsurance Group of America, Inc. (NYSE: RGA), one of the largest global life and health reinsurance companies.
“This flex industrial portfolio offered a strong value-add opportunity for the buyer, with properties that were still under original ownership by the developer, Enterprise Companies, who had originally developed the properties in the late 1970’s,” explained Hough, who led the team that completed the transaction as a 1031 exchange, arranging financing in a short time frame for tax purposes.
“Both the Southwest Houston industrial market and the West Houston/Outer submarket offer ideal positioning near major transportation arteries with expansive nearby population growth,” Strickland added. “Available space is expected to remain tight in these industrial markets, offering opportunities to push rental rates at the properties.”
The Class A multifamily portfolio is comprised of Amelia Apartments, a two-story apartment building with 32 units located at 2002 Johanna Drive, and Jacquelyn Place Apartments, a three-story apartment building with 36 units located at 7630 Amelia Road. Both assets are situated in Houston’s Memorial/Spring Branch multifamily submarket. NKF’s Hough and Strickland represented the borrower, private investor Bravo Capital Management, with bridge financing provided by Ready Capital (NYSE: RC), a commercial mortgage REIT.
“The Houston multifamily market remains active with an estimated 8,145 units to be delivered during 2019, which is up slightly from the 7,294 delivered in 2018. Houston is expected to be the top metro area for population growth for 2018-2020 with an influx of an estimated 258,000 new residents,” noted Strickland, who worked with Hough on the two transactions. “The borrower’s value-add plan for the new multifamily assets will further enhance property values at each property through light capital expenditures and increasing top-line revenue through implementation of tenant expense recoveries and market standard fees.”
NKF Research notes that for first quarter 2019, average asking rent for new multifamily deliveries was $1.93 per square foot contrasted to existing properties average asking rent of $1.25 per square foot. Over 20,000 multifamily unit permits were issued in the Woodlands-Sugar Land submarket from February 2018 to February 2019, a 25 percent increase from the prior year.
About Newmark Knight Frank
Newmark Knight Frank (“NKF”), operated by Newmark Group, Inc. (“Newmark Group”) (NASDAQ: NMRK), is one of the world’s leading and most trusted commercial real estate advisory firms, offering a complete suite of services and products for both owners and occupiers. Together with London-based partner Knight Frank and independently-owned offices, NKF’s 16,000 professionals operate from approximately 430 offices on six continents. NKF’s investor/owner services and products include investment sales, agency leasing, property management, valuation and advisory, diligence, underwriting, government-sponsored enterprise lending, loan servicing, debt and structured finance and loan sales. Occupier services and products include tenant representation, real estate management technology systems, workplace and occupancy strategy, global corporate services consulting, project management, lease administration and facilities management. For further information, visit www.ngkf.com.
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