Houston Mixed-Use Project Lands $31M Construction Loan From 3650 REIT

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Major balance-sheet lender 3650 REIT has originated a $31 million loan for the construction of a mixed-use project in Houston. The term for the loan on 4411 San Felipe Street is 30 months, the company told Commercial Observer.

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The seven-story, 92,340-square-foot project from Houston-based development and investment firm DC Partners is due to include ground-floor retail and three levels of office space, as well as three levels of parking. The project is located in Houston’s Post Oak Park submarket, one of the few, truly 24-7 neighborhoods in Texas’ largest city, something DC Partners Chief Financial Officer Doug Dillard touted in a mid-December release about the financing.

“Recognizing the significant opportunity in the growing Houston market, 4411 San Felipe’s location next to our luxury Arabella condominium development will help ensure its success as a live-work-play hub in the city’s Uptown business district,” Dillard said.

DC Partners picked 3650 REIT for the financing based upon a pre-existing relationship and the trust’s understanding of the submarket that it said in a release “has been overlooked by other lenders.” Michael Fleischer and Shin Bowers led the transaction team for 3650 REIT.

“We are pleased to close the year strong with this loan for the San Felipe project, which involves a best-in-class sponsor with a clear path to deliver high-end office and boutique retail space in the desirable Post Oak Park submarket of Houston,” 3650 REIT Co-Founder and Managing Partner Jonathan Roth said. “With our origination of over $125 million on our bridge and event-driven platform this month alone, we head into 2021 with great momentum, and look forward to capitalizing on the many opportunities we see to meet borrowers’ unique needs and continue to grow our differentiated lending platform.”

DC Partners plans to relocate its headquarters to 4411 San Felipe. The company did not respond to a request for comment on the timeline of the project.

The $31 million from 3650 REIT comes amid a shift in a construction financing due to the pandemic. Before, construction financing was a borrower’s market, as lenders competed for business in one of the most bullish commercial real estate markets in living memory. Increasingly, the power now lays with lenders who have the wherewithal to finance in a much riskier overall environment.