EXCLUSIVE: LUXE Residential Lands Financing To Build Luxury Multifamily In Grand Prairie
Grand Prairie is a step closer to housing a new 318-unit, Class-A multifamily development from LUXE Residential, as the developer secured a significant piece of its capital stack and is nearing the end line on the rest.
A Colliers International team led by Executive Director Jeffrey Donnelly and Managing Director Dmitry Levkov closed on a $3.4M land acquisition and pre-development loan for the developer, creating momentum for a deal that will bring hundreds of luxury apartments to the Dallas suburb.
The Colliers team additionally obtained commitments for $8.9M in joint-venture equity and $10.5M in mezzanine debt.
When all funding is secured, LUXE will develop upscale apartments on the south side of Bardin Road in Grand Prairie, just east of South Great Southwest Parkway. The site is 200 yards from Interstate 20 and State Highway 360, Donnelly and Levkov said.
Rental units will cost anywhere from $1,130 to $1,755/month, or between $1.30 and $1.65/SF.
"This little acquisition/pre-dev loan facilitated our client’s closing on the site, and now puts us in great shape to close on the main construction financing in June," Donnelly said. "We were very pleased to source — from a single Midwest institutional investor group — both the $8.9M in joint venture equity (representing roughly a 90-10 deal), as well as the $10.5M in mezzanine debt."
The group is close to locking down the last piece of the capital stack — a 60% loan-to-cost, $31M construction loan, Levkov said.
LUXE Residential has developed more than 5,000 Class-A podium and garden-style multifamily complexes across the U.S.
The loan comes amidst an environment in which financial institutions are beginning to watch multifamily activity closely in the DFW Metroplex to ensure returns will not be impacted by market oversupply.
So far, Grand Prairie does not appear to be a market of concern, but lenders have been pretty tight-fisted in the submarket, the Colliers team said.
"Lenders and investors are still bullish on the greater Dallas-Fort Worth market. There is currently a tight supply in Grand Prairie, however, regardless of deal metrics, lenders are not doing construction loans unless they see a strong sponsor behind it," Donnelly said.
"This borrower has a strong balance sheet but more importantly, it has built almost 6,000 units of multifamily, almost half of which are located in the Dallas market, which is their core market. Additionally, they are also known to develop best-in-class product. These have all been incredibly important factors when we’ve had lenders or equity investors interested but on the fence."
Demand in Grand Prairie for this specific type of product remains strong, making it a prime location, Levkov said.
"Grand Prairie is a great suburb in the path of growth," he said. "The area has experienced very strong demand for multifamily developments, and developers are having to offer few or no concessions in renting up newly constructed projects. Grand Prairie is also close to major employers, which is a huge draw for multifamily developments."