Texas Dow Employees CU loans $28 million to build hospital

TDECU is lending $28 million for this new hospital in Sweeny, Texas (courtesy of Sweeny Community Hospital District).

The Texas Dow Employees Credit Union of Houston announced Thursday that it has closed a $28 million loan to build a new local hospital — another sign of commercial lending momentum.

Although the Mortgage Bankers Association said it expected commercial real estate lending to fall in the second half of this year, signs for credit unions and other lenders in the second quarter showed strong growth.

TDECU ($4.7 billion in assets, 366,960 members) was no exception, with the third-quarter hospital deal skyrocketing its origins well above those of all of 2021. Last year, TDECU’s commercial real estate loans fell 23% to $51.7 million. In the first half of this year, TDECU produced $42.5 million, triple its production in the first half of 2021.

TDECU closed the $28 million funding agreement on August 1 with the Sweeny Community Hospital District to build a new hospital in Sweeny, a town 65 miles southwest of downtown Houston. A groundbreaking ceremony will be held on August 31, and the $45 million project is expected to be completed in early 2024.

Josh Brian, market president of TDECU, said the hospital district reached out to the credit union to support its fundraising.

“The more we watched it, the more we fell in love with the project,” Brian said.

Josh Brian Josh Brian

“We want to be part of projects like these,” he said. “If something happens and we can offer better, more logical terms than a big bank, we want to be the community bank supporting that business.”

CU time analyzed second-quarter NCUA data for the 25 largest residential loan producers. Although several large commercial credit union lenders are not part of this group, these 25 credit unions originated $3 billion in commercial real estate loans in the second quarter, up 58% from the second quarter of 2021. Their commercial real estate loans in the first quarter rose 71% to $1.8 billion.

NCUA data for all credit unions showed commercial real estate loans rose 44% to $37.1 billion last year and 46% to $10.6 billion in the first quarter .

The Mortgage Bankers Association has followed similar trends for all commercial real estate lenders. However, on July 19, it lowered its forecast, predicting a drop in the second half. He said mortgages for 2022 would be $733 billion, down 18% from $891 billion in 2021.

On Thursday, the MBA said commercial home-backed loan production for the second quarter set a new quarterly record, up 19% from the second quarter of 2021.

Jamie Woodwell, vice president of commercial real estate research, said the MBA still expects commercial lending to slow in the second half.

“That said, improvements in fundamentals and values ​​over the past few years are providing strong support for properties with ongoing lending and continued financing opportunities for properties whose cash flow can support the debt,” Woodwell said. .

Jamie Woodwell Jamie Woodwell

This apparently includes hospitals.

The MBA’s quarterly survey of commercial/multi-family mortgage banker origins showed the second quarter of the year index for healthcare origins was 70% higher than the first quarter and well above of all other quarters since the start of 2019 – except for a record second quarter of 2021. The second quarter of this year was 3% lower than the previous year’s record.

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