In 2010, when Dallas-based Mill Creek Residential spun out from Dallas-based Trammell Crow Residential (TCR), questions were raised about whether TCR—a once vaunted name in multifamily development—would get back in the development business. Now, with more than 2,000 units in the pipeline, that question has been answered.
TCR has broken ground on almost 1,100 units in Dallas and Houston on dirt bought since the recession began. “They’re all new deals,” says Steve Bancroft, senior managing director. “We haven’t developed any of the legacy sites that TCR owns.”
Bancroft says Harlan R. Crow wants to own one out of every four or five deals the company builds. “We’ll still opportunistically sell as the market dictates what the appropriate strategy is, but ideally, we’d like to own 20 to 25 percent of our assets long term,” he says.
TCR once again set the stage for developing by solving balance sheet issues. At one time, it had $3.5 billion of recourse debt and it’s debatable if the assets were worth that much. Through refinancing, extending and paying down that debt, the company trimmed that amount to $700 million. By the middle of the year, it will have about $500 million in recourse debt. Bancroft says the company is going to equity providers for these new developments that it “has done business with before.”
Ken Valach, CEO of TCR after Charlie Brindell spun off Mill Creek, held onto key development people in Houston and Denver and kept them as asset managers through the downturn. It has offices in Houston, Dallas, and Denver.
“We’re looking at expanding regionally to a few more key markets,” Bancroft says.