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Houston Luxury Apt. Project Gets Funding

Hanover Co. Lands $154 Million in Debt, Equity for 39-Story Hanover River Oaks
January 5, 2018
Developers of a planned luxury high-rise apartment tower in Houston have landed $154 million in construction financing.

Hanover Company, of Houston, has secured a $97 million construction loan and $64 million of equity for Hanover River Oaks, a 39-story, 370-unit tower in the city’s Upper Kirby District. About half the construction loan is being funded by PNC Bank with the rest syndicated through Amegy Bank and Cadence Bank.

JP Morgan Asset Management, on behalf of a group of institutional investors, is supplying the equity for the deal. The project broke ground last month and construction is expected to finish in 2020. HFF brokered the capitalization for Hanover.

The tower will include about 10,000 square feet of street-level retail space at 2930 Kirby Dr., just southwest of downtown Houston. Apartments will be a mix of studio to three-bedroom units, averaging 1,172 square feet, with the first units slated to deliver in the first quarter of 2020. The tower’s amenities will include a rooftop pool with cabanas, outdoor grilling stations, a private theater, fitness center, pet washing station and a water wall garden.

The financing clears the way for Hanover to begin work in earnest on a project the company put on pause last year. The firm acquired the land in 2016, but lenders balked at funding new high-end apartment projects as Houston’s energy-based economy hit the skids. As that sector - and Houston’s overall economic fundamentals - have improved, projects like River Oaks make more sense, say market players.

Hanover, known primarily as a merchant builder, may see the River Oaks project as a longer-term hold, say market players. Rather than sell as soon as the project is finished, the firm may hang onto the property for three- to five years, as the next economic cycle develops.

John Doherty, Multifamily Reporter  CoStar Group   

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