Financial distress creeped into the fallout of a Texas law meant to close the loophole that let affordable housing developers get tax breaks in big cities via deals done in far-flung towns.
Langdon Street Capital’s $60 million CMBS loan for a 277-unit apartment complex in Austin was flagged for special servicing this week after it failed to make an agreed payment.
The Beverly Hills California-based firm used a “traveling” housing finance corporation in Pleasanton, a town of 11,000 people south of San Antonio, in a 2024 sale-leaseback to get tax breaks for the complex at 12101 North Lamar Boulevard in Austin.
House Bill 21, the law meant to end these traveling tax breaks, took effect Sept. 1, and the Travis Central Appraisal District wasted no time in nullifying the deal.
Langdon had agreed to pay down the loan’s debt service coverage ratio to 1.28 if its tax-break wasn’t granted by Aug. 29 but didn’t make the payment after the break didn’t come through.
HB21, which has also drawn a lawsuit, effectively killed the tax deal, because it undoes existing traveling HFC deals, or at least that’s how Travis CAD reads it. Some appraisal districts have filed temporary restraining orders against traveling HFCs since the law took effect, but Travis CAD simply said property owners need to meet the new requirements to get the tax breaks.
Here’s what else happened in Texas real estate this week.
Compass stands to dominate the Dallas-Fort Worth real estate market with its acquisition of Anywhere Real Estate, which is being called a “mega-merger.”
Where does Elon Musk hold land and leases in Texas? Here, there and everywhere. Meanwhile, in Bastrop, Musk’s Boring Company pitched tunnels to connect pedestrian trails, and the city has ambitions for a 390-acre mixed-use development to include a hospital, hotel and convention center.
Multifamily distress kept on rolling this week as Utah-based Keller Capital’s Austin portfolio took a 50 percent appraisal haircut.
Former Texas Gov. Rick Perry is behind a real estate investment trust looking to raise $500 million in an initial public offering. Fermi Inc.’s strategy is around energy security and digital demand. Its signature development “Project Matador,” is a 5-acre campus in Lubbock expected to lure data center tenants with 1 megawatt, enough to power hundreds of homes for a year.
Jonas Woods of Pacific Elm Capital, a prolific repositioner of office buildings in Dallas, named a successor in CEO Billy Prewitt. Woods is launching a venture with Dallas-based Ignite-Rebees to pool assets across the Texas Triangle valued at $4 billion.
Ignite-Rebees is one of the firms involved in the redevelopment of a stretch of Henderson Avenue, across Central Expressway from Knox Street, which it envisions as Dallas’ answer to Los Angeles’ Melrose Avenue.
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