Zach Tran has been developing apartments and single-family homes for more than a decade, but for the first time one of his projects is financed by Trez Forman Capital Group.
Diamondback Investment Group LLC, the Greensboro, North Carolina-based development company owned and managed by Tran and business partner Hal Kern, is developing a garden-style apartment complex in Huntersville, a North Carolina town of about 55,000.
The Point at Caldwell Station will be a 20-building, 297-unit development with apartments and rental townhouses on vacant land at 17355 Old Statesville Road, about a two-hour drive north of Charlotte.
Trez Forman, a Boynton Beach-based joint venture between mortgage lender Forman Capital and Canadian commercial mortgage lender Trez Capital Group, issued a $42 million loan, covering about 78 percent of the construction cost.
The transaction closed July 5, the culmination of two years of work to get approval for the project.
Huntersville is careful not to overdevelop and wants to preserve its quality of life and keep traffic to a minimum, said Brett Forman, president and CEO of Trez Forman.
While the town’s push against overdevelopment is evident in the permit process, it also is what attracted Trez Forman to the market.
“It sounds crazy, but that’s one of the reasons we like Huntersville. Huntersville is very difficult to get the permits. They don’t want overdevelopment. They have excellent schools, and that’s what attracted us to the market,” Forman said. “We think the apartment market will be great.”
Indeed, tapping into off-the-beaten path markets seems to be Trez Forman’s business model.
On Feb.1, it closed a $44.8 million construction loan for apartments for seniors in Venice on Florida’s Gulf Coast.
“It is in … a path of growth, an area that is growing, but perhaps some lenders might think it’s a smaller market than they want to lend in. We believe in the growth, and therefore we were supportive of it,” Forman told the Daily Business Review in February.
The lender also is increasing its presence elsewhere in North Carolina. Other ventures include a $35 million loan in February for a mixed-use project in Wilmington, a $17.2 million acquisition loan in May for a 138-acre residential-development site in the Raleigh-Durham-Chapel Hill area and a $2.5 million acquisition loan for 196 acres in Surf City.
“Trez Forman is actually known for which submarkets to be in, so I am proud of the transaction,” Forman said, referring to the Huntersville apartments.
For his part, Tran said he has relied on bank lenders for other apartment and single-family projects in North Carolina as well as Maryland, Pennsylvania and West Virginia.
Now he’s talking with Trez Forman about financing future projects. Working with this lender is more of a partnership, Tran said.
“This is the first type of loan that I’ve done in a nontraditional sense. It’s the nonrecourse component that’s very attractive to us,” he said. “Basically my only obligation to the loan itself is to complete it on time on budget. But if the project doesn’t specifically perform or there’s an asset issue, then I am not personally liable for it. … In terms of the deal, rather than the individual developer, we are not personally guaranteeing a loan. We are just personally guaranteeing completion. It’s more of a partnership rather than a traditional lender-bank situation.”
Diamondback’s latest finished project is a 66 single-family development in Burlington, North Carolina. The company also is working on a 183-unit apartment development and a 82-townhouse project, both in Burlington, according to its website.
The Huntersville project will include a gym, saltwater pool and dog park. Construction is expected to finish by summer 2020.