DEAL OF THE WEEK
An apartment oversupply? No, not in Pearland
Central Houston may have too many new apartments for current needs, but the opposite is true in Pearland, where construction workers are preparing a previously undeveloped 30 acres at the northeast corner of Cullen Boulevard and McHard Road/Brookside Road as the site of a $52 million project that will bring 247 units to the market in spring 2018.
The land is just south of Christia V. Adair and Tom Bass parks, near Beltway 8.
“There’s been limited new multifamily development in the city of Pearland, even during the go-go days,” said Matthew Morgan, president of Funding Inc., a Houston-based multifamily lender and mortgage banker.
Morgan and Kevin Kirton originated and underwrote a $41.9 million, construction and permanent mortgage for the Lake Park Townhome Apartments on behalf of the borrower, Lake Park Pearland. The loan was made in accordance with the Federal Housing Administration’s 221(d) (4) Multifamily Accelerated Processing program.
The project will consist of 23 townhome-style buildings with nearly 380,000 square feet of living space, according to the city of Pearland. It also includes a 4,274-square-foot clubhouse.
The three-story residential buildings will be surrounded by green space. Rents are projected to range from about $1,150 for the smallest one-bedroom unit to just more than $2,000 for the largest three-bedroom unit, according to Morgan.
The most comparable properties in Pearland are in the Shadowcreek Ranch area. Among six communities totaling 1,963 units there, occupancy averages 93.4 percent, according to Apartment Data Services. That’s up from 76.5 percent a year ago. Rents at the six communities average $1,297 a month for 972 square feet.
Pearland’s population of 115,600 is projected to reach 200,000 by 2025, according to the city.
The apartments, designed by architecture firm Gonzalez Newell Bender, will be finished in 2018, the same year some experts anticipate the Houston apartment market will stabilize and money will begin to flow again for new projects.
The loan for the Lake Park Townhome Apartments was funded through the sale of Ginnie Mae mortgage-backed securities through Berkadia Commercial Mortgage, according to Funding Inc. The permanent mortgage loan has a 40-year term at a fixed rate of 3.4 percent.
Since 1987, Funding Inc. has closed $1 billion in multifamily loans in Texas, New Mexico and California. The company is affiliated with Buckhead Investment Partners.