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HBJ’s 2017 Deals of the Year: Residential Real Estate

HBJ’s 2017 Deals of the Year highlight the most impactful deals that closed this year and the dealmakers behind them.

Winner: Australia-based Caydon breaks ground on Midtown’s first high rise

The skinny: Melbourne, Australia-based Caydon secured financing and broke ground on its $200 million residential tower in Houston’s Midtown. The 27-story tower, at 2850 Fannin St., will be the first high-rise property in Midtown, and first move-ins are expected in mid-2019. Caydon closed on the 1.15 acres in mid-December 2016. The next month, the company demolished the former building on the property — the Mental Health and Mental Retardation Authority building — to make way for the tower dubbed The Midtown. When complete, it will have 357 units along with 12,000 square feet of retail space and a 482-space parking garage.

Deal amount: Undisclosed

Broke ground: Nov. 8

Dealmakers: Caydon is the developer, ARA Newmark Houston was the land broker, Hoar Construction is the general contractor, Bank of the Ozarks and Invesco Real Estate provided the financing, HFF secured the financing and Ziegler Cooper Architects designed the tower.

Why it matters: The project is the developer’s first U.S. project, which shows a lot of confidence in the Houston market.

Caydon’s CEO Joe Russo said “I looked at five cities in the U.S. and fell in love with Houston.”

Meanwhile, in August, Caydon acquired a 41,000-square-foot site near The Midtown from Current Standing Developments — formerly known as PLC Capital Corp. — for an undisclosed amount. The land will be mixed-use with apartment units, retail and parking.

Finalist: Crystal Lagoon breaks ground at Houston’s Balmoral

The skinny: Houston-based Land Tejas Cos. broke ground on the first lagoon in the Houston area using technology from Miami-based Crystal Lagoons U.S. Corp. The 2-acre lagoon is in Land Tejas’ 580-acre community called Balmoral and is expected to be the first Crystal Lagoon in the state and the third in the U.S. Crystal Lagoons built its first lagoon on a Chilean resort nearly two decades ago and today has 600 projects globally and is growing in the U.S. with the arms race for residential community amenities.

Deal amount: Not disclosed. Contracts to lease its technology vary depending on size and location.

Broke ground: October

Dealmakers: Land Tejas Cos. is the developer, Crystal Lagoons U.S. Corp. owns the product, Heidt Design is the designer, KGA/Deforest Design LLC is the landscape architect, and Jones Carter is the engineer.

Why it matters: Crystal Lagoons U.S. Corp. had been in discussions with at least 10 Houston- and Galveston-area developers to bring a man-made lake to the region since at least 2015. Land Tejas first signed the deal with the company in January that includes bringing another lagoon to one of the master-planned developer’s undisclosed communities. The Balmoral lagoon will open simultaneously with an accompanying $10 million amenity village next summer – the first Crystal Lagoon to do so.

Finalist: River Ranch Holdings acquires 7,000 acres near Dayton

The skinny: Landowner Weldon “Buddy” Alders sold about 7,000 acres in Liberty County near Dayton to River Ranch Holdings LLC in March, according to the Liberty County Appraisal District. Alders confirmed to HBJ that he sold the land for an undisclosed amount to an entity wanting to build a master-planned community. A municipal utility district was approved in March for the first phase of the River Ranch community.

The general plans for this first phase, which were approved by the Dayton City Council in September, include developing 671 acres to have 230 large estates, 1,070 standard residential lots, a 12-acre site for a school, 5-acre site for a waste water plant and 135 acres for commercial real estate. Construction for the houses in this first phase could begin in about a year. Preliminary plans announced in 2016 for the 7,000 acres – possibly 9,000 acres by the end – called for about 14,000 homes, which would add about 35,000 people to the city, but the city estimates there could be 21,000 homes.

Deal amount: Undisclosed

Dealmakers: Weldon “Buddy” Adlers was the seller, River Ranch Holdings LLC was the buyer, which is made up of Ed Gray of Baytown’s Gray Enterprises, Bill Sjolander and the Angel brothers from Baytown’s Angel Brothers Construction

Why it matters: This was one of the largest land sales in Houston in 2017. Land Advisors Organization said at an October event that the sale skewed the Houston numbers for the amount of land sold in 2017. Northeast Houston is the last part of the city yet to be developed and is expected to explode with growth over the next decade, according to Dayton officials. The city has inked several industrial deals for the city over the past year and is planning a downtown revitalization plan. Multiple residential communities are already underway in the county and there’s only more to come.

Finalist: Christie’s International Real Estate finds new Houston affiliate with Nan & Co.

The skinny: Christie’s International Real Estate inked a deal with Nan and Co. Properties to be its Houston affiliate after a three-year search. CIRE is the luxury real estate arm of the historic London-based auction house that has an international invitation-only affiliate network. The brokerage had previously been affiliated with Houston’s Martha Turner Properties, but that deal ended when Sotheby’s bought Martha Turner in 2014. Nan and Co. Properties, headed by founder, CEO and Realtor Nancy Almodovar, had initially approached CIRE to be its affiliate in 2015, but CIRE said the business needed to grow. Almodovar didn’t give up and won the deal in 2017.

Deal amount: Not disclosed

Date closed: February

Dealmakers: Christie’s International Real Estate and Nan and Co. Properties

Why it matters: The luxury brand Christie’s International Real Estate finally came back to Houston after a three-year hiatus. CIRE’s executive director said that Houston is an important city for the brand: “Houston is a feeder to many of our other markets. We have buyers from Houston who purchase second homes in Florida and abroad. We also have Christie’s art clients who contact us for our real estate services.” Meanwhile, under CIRE’s brand, Nan and Co. will be able to advertise its Houston listings on CIRE’s international platform, magazine and website, and in national publications.

Finalist: Howard Hughes Corp. breaks ground on third Houston-area master-planned development

The skinny: The Howard Hughes Corp. (NYSE: HHC), the Dallas-based parent company of The Woodlands Development Co., broke ground on a nearly 2,000-acre master-planned community in Conroe, about 13 miles north of its 28,000-acre flagship community The Woodlands. Plans for The Woodlands Hills were announced in June of this year. The community eventually will contain more than 4,500 residences with community amenities such as 20 neighborhood parks, 9.5 miles of hike and bike trails, and a 17-acre village park with a pool, fitness center and tennis courts. A future commercial and retail development is also planned on more than 100 acres within the community.

Deal amount: Howard Hughes paid $67.3 million for 1,343 acres in 2014.

Broke ground: Nov. 15

Dealmakers: The Howard Hughes Corp.

Why it matters: It’s Howard Hughes’ third master-planned community in the Houston area. Construction for The Woodlands Hills begins just as Howard Hughes’ 43-year-old, 28,000-acre The Woodlands nears build-out. The Woodlands Hills is Howard Hughes’ smallest master-planned community. A representative from The Woodlands Development Co. said it’s unlikely Houston-area developers will build gargantuan master-planned communities in the future.

Finalist: Houston Housing Authority breaks ground on first affordable housing project in a decade

The skinny: The Houston City Council voted this year to build 12 affordable home projects totaling 1,543 units. HHA broke ground on the first project, Independence Heights Apartments, in March. The project is located at 302 Crosstimbers St. and will offer 154 subsidized units. It is designated for eligible low-income renters earning at most $41,500 a year and supported by a public housing voucher. Leasing applications are expected to be open to the public by mid-2018. Construction is slated for completion by fall of 2018. For the project, the HHA acquired five land parcels — three of which were previously owned by the Houston Independent School District — for a total of $1.78 million, a spokesperson told HBJ.

Deal amount: $35.7 million

Broke ground: March

Dealmakers: Citibank provided the construction loan, Alden Torch Financial LLC is an investor, City of Houston provided grants

Why it matters: HHA hasn’t built any new projects in 10 years despite concerns that Houston faces an “affordable housing crisis.” By breaking ground on one project and potentially building 11 more affordable home developments, the city is showing that its attempting to alleviate the crisis. In the wake of Hurricane Harvey, these homes may be needed more than ever.

Finalist: Johnson Development Corp. acquires 1,600 acres

The skinny: Rockspring Capital, a Houston-based real estate investment firm, sold a 1,619-acre parcel northwest of Houston to Houston-based The Johnson Development Corp., one of Houston’s largest master-planned community developers. The land is located southwest of U.S. Highway 290 and Katy Hockley Road in northwest Harris County, a few miles west of the Grand Parkway. Rockspring began assembling the land tract in 2006 and finished acquiring all the parcels in 2008. However, it had to hold off on selling until after the 2008 recession. In June, Johnson had no immediate plans for the land, but Rockspring described the property as “ideal for the next major master-planned community in the Northwest corridor,” according to the listing.

Deal amount: Not disclosed, but listing price was nearly $43.5 million

Date closed: June

Dealmakers: Rockspring Capital was the seller, The Johnson Development Corp. was the buyer and was represented by NewQuest Properties

Why it matters: Residential growth is moving northwest out toward Waller County as Cypress-area communities fill out. A master-planned community on the property would be Johnson’s first in the northwest Houston area. The suburban land deal is one of the largest in the Houston area since the oil slump.

Finalist: Dallas-based Tradition Senior Living LP breaks ground on first Houston project

The skinny: Dallas-based Tradition Senior Living broke ground in April on a senior living facility on 12 acres between Buffalo Speedway and South Main Street. It is the company’s first project in Houston. The land had been vacant for at least 17 years, according to the agent who represented the sellers. Tradition Senior Living purchased the land in 2016. The senior living center will sit on a 7.6-acre site at 9339 Buffalo Speedway and will offer many amenities in addition to its 222 independent living units in one building and 63 assisted living and 31 memory care units in a building next door. The community is expected to open in late 2018.

Cost: Not disclosed Broke ground: April

Dealmakers: Tradition Senior Living LP was the buyer and HFF brokered the deal for the undisclosed seller.

Why it matters: As Baby Boomers begin to retire en masse, developers are catering to this growing demographic. Tradition-Buffalo Speedway will include amenities, such as underground parking garages, multiple restaurant-style dining venues, and daily activities.

Finalist: Chinese developer breaks ground on new master-planned community northeast of Houston

The skinny: Yihai Group — based in Dalian, China— is the largest residential developer in Liaoning, a northeast province of China. Yihai Group’s U.S. counterpart, McKinley Development Co. Inc., based in Willis, purchased 615 acres at the intersection of state highways 105 and 321 in Cleveland, just east of U.S. 59 in early 2016. The land was previously used for timber production. Dubbed the Grand Oaks Reserve, the $100 million mixed-used community broke ground in August. It will have 976 single-family homes, a 256-unit luxury condo complex and a 416-unit economy apartment complex. Future commercial and retail developments are planned for 30 acres fronting state highway 321.

Cost: Undisclosed

Broke ground: August

Dealmakers: McKinley Development Co. Inc., a sister company of Yihai Group based in China.

Why it matters: Grand Oaks Reserve is the first master-planned community in the 8,000-resident city of Cleveland. Residential and commercial development is heating up northeast of Houston with the opening of the Grand Parkway, which connects the Bayou City’s outer suburbs from Sugarland, Katy, Cypress and The Woodlands to the Cleveland area. As Kingwood nears buildout, developers are looking elsewhere to build.

Dec 14, 2017, 8:31am CST
Jen Para
Web producer
Houston Business Journal