Case Studies
Hutto Case Study
Deal Summary:
Raised $57,000,000 to acquire 468 acres outside Austin, TX Within 60 days, Nebo structured and sourced all of the relationships and funding including; an entrepreneurial JV partner, which contributed sponsor equity, an institutional investor, which provided the majority of the required $12,000,000 of equity and a lender to provide the highly leveraged, $45,000,000, non-recourse debt piece.
Nebo Summary:
Deal closed within 60 days of Nebo’s involvement
Raised both Sponsor and Senior Equity
Arranged a high level of non-recourse Debt without which neither the Sponsor nor Senior Equity would have participated
Insured that the referring commercial real estate investment brokers closed a difficult transaction that had multiple, competing offers
Established credibility of the Buyer to the Seller with the immediate formation of a qualified JV partnership
The Deal
The subject property is an assemblage of 468 acres of raw land controlled by four entities with mainly commercial use entitlements in place. Specifically, the property is two of the four quadrants surrounding the intersection of a soon to be opened major Toll Highway # 130 and the existing Texas State Highway # 79 in Hutto, TX a rapidly growing suburb of Austin.
The Client, an Austin based investor, wished to buy and flip and/or develop the entire acreage, and was brought to Nebo by a commercial investment broker.
The Client had limited large scale development experience, but was very diligent in its pursuit and understanding of the property. The site had obvious appeal, but the traffic ingress and egress and railroad crossing issues had not been fully comprehended by the market. It was erroneous ‘common knowledge’ by many in the local real estate community that these issues could hinder development for many years. On the other hand, there was word out on the street that a number of other potential all cash buyers were ready to make offers for the property.
Nebo worked quickly to grasp the opportunity and to help the Client to quickly put the property under contract surmising that if the entire parcel was under the sole control of one experienced developer, it would have an immediate enhanced value and substantial future additional value from additional land planning, land development and vertical development.
From prior relationships, Nebo quickly identified a suitable JV Partner.
Within days of being approached a formal agreement was being negotiated. The JV Partner agreed to purchase roughly a third of the site at a later date for a vertical development of approximately 1 million sq. ft. of retail, committed to most of the sponsor equity and made a large deposit on the properties.
Because of the size of the $50,000,000 plus initial capitalization of land acquisition and development this joint venture required third party equity as well as debt. Nebo had already been working with the JV Developer partner in sourcing reliable and entrepreneurial early stage capital for another project and one of these equity sources quickly grasped the opportunity and became an integral part of the due diligence team. The Equity partner performed due diligence on a 45 day fast tracked basis along with both developer partners.
Nebo, with the assistance of the Equity partner, also secured the Lender, which provided 80% of the total cost of the acquisition, initial land planning and development funds on a non-recourse basis. The Lender was able to close in just over 30 days in a seamless closing due to their strong understanding of the deal as presented.
Due to the quick closing, Nebo’s Clients visibility in their market was substantially enhanced, resulting in additional deal flow. In addition, they have now broken into the institutional equity capital world with gusto and will have the resume for other large transactions requiring institutional capital.
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