In December 2023, Beal Bank announced the origination of a $619,450,000 loan for a new Knox Street development. The origination will cover both construction and permanent debt for the massive development. The project's backers have more than enough credibility to instill confidence in the bank: MSD Partners, Trammell Crow Company, Highland Park Village Associates, and The Retail Connection are working together on the Katy Trail-adjacent development. JLL Capital Markets served as financial advisor for the borrowers.
The project will be nothing short of transformative for the area when it opens in 2026. The project's 4-acre footprint will house a combined 1 million SF of retail, office, hotel, and residential space. This includes:
- A 140-key Auberge Resorts Collection hotel
- 48 luxury condo units
- 150,000 SF of "Class AA boutique" office space
- A 173-unit "Class A+" multifamily tower
- 100,000 SF of ground floor and second-story retail and restaurant space
- A park with direct access to the Katy Trail
Some traditionalists may not be pleased with the "Class AA" and "Class A+" classifications, but it is clear the project is aiming to be among the best of the best. Notably, the developers have recognized the need for office space to be more than just utilitarian. Given weak occupancy in the office market on account of remote work, a convenient location with ample amenities is important to make workers want to come into the office. The developers have likely identified a valuable niche that will be willing to pay top-dollar for the space.
The Knox area, nestled between Uptown Dallas and the Park Cities, is a prime spot for development. While many residents may complain about new multifamily developments overcrowding the Katy Trail, the location offers prime demographics and a level of walkability that is seldom found in Dallas. Anthony Sassine, Executive Managing Director of Beal Bank's wholly owned commercial lending subsidiary, is optimistic about the area, stating:
We are pleased to have worked with the development team to complete a loan for this one of a kind project. This financing helps ensure this exciting project will generate dynamic new opportunities for this prime real estate in one of the country's most rapidly developing and prosperous areas.
The financing for the development offers an interesting case study in flexible financing. Although the developers have a successful track record with the scale and expertise to take on such a daunting project, it may seem surprising to some that the bank financing offers the flexibility of both construction and permanent financing.
The Beal Bank family of companies is a privately owned financial institution and they are not syndicating the deal. While the bank's private ownership may not have a huge effect on the deal, the lack of syndication certainly does. Beal Bank is able to leverage their familiarity with the area alongside their $32.5bn of assets to create a flexible financing package that works for all parties.
Syndication certainly has its place in financing, especially for a deal of this size. However, for Beal Bank and the developers, avoiding the risks and red tape of syndication has allowed focus to be on the development without worrying about additional financing or finding a refinance lender upon stabilization.