Financial strain has emerged in the Texas real estate market following the implementation of a new law targeting tax incentives for affordable housing projects that used so-called “traveling” housing finance corporations (HFCs).
Langdon Street Capital, based in Beverly Hills, California, had secured a $60 million commercial mortgage-backed securities (CMBS) loan for a 277-unit apartment complex located at 12101 North Lamar Boulevard in Austin. The firm used a Pleasanton-based HFC—originating from a town of 11,000 south of San Antonio—in a sale-leaseback transaction last year to qualify for tax breaks on the Austin property.
However, House Bill 21 (HB21), which took effect September 1, was designed to end such practices by closing loopholes that allowed developers to claim tax exemptions through deals made with distant municipalities. In response, the Travis Central Appraisal District quickly moved to nullify Langdon’s arrangement.
Langdon Street Capital had previously agreed to maintain the loan’s debt service coverage ratio at 1.28 if its requested tax break was not granted by August 29. After failing to secure the exemption under HB21, the company did not make the required payment and its loan was flagged for special servicing this week.
The new law is also facing legal challenges but has already led some appraisal districts to seek temporary restraining orders against traveling HFCs. According to Travis CAD, property owners must now comply with updated requirements to receive any future tax breaks.
Elsewhere in Texas real estate this week, Compass is set to expand its presence in Dallas-Fort Worth after acquiring Anywhere Real Estate in what industry observers are calling a significant merger.
Elon Musk continues his activity across Texas with land holdings and leases scattered throughout the state. In Bastrop, Musk’s Boring Company proposed tunnels connecting pedestrian trails as part of broader city plans for a mixed-use development featuring healthcare and hospitality facilities.
Multifamily properties remain under pressure; Utah-based Keller Capital saw its Austin portfolio lose half its appraised value recently.
Former Governor Rick Perry is supporting Fermi Inc., a real estate investment trust aiming to raise $500 million through an initial public offering focused on energy security and digital infrastructure. Its flagship “Project Matador” will be developed in Lubbock as a data center campus expected to provide up to one megawatt of power capacity.
In Dallas office markets, Jonas Woods of Pacific Elm Capital named Billy Prewitt as CEO successor while launching an asset pooling venture valued at $4 billion with Ignite-Rebees. Ignite-Rebees is also involved in redeveloping Henderson Avenue into what it hopes will become Dallas’ version of Melrose Avenue in Los Angeles.
