DLP Capital set to deploy $2.6bn into Texas, Sunbelt markets

The firm anticipates 90 percent of its activity will be in the Sunbelt, where it will allocate debt and equity.

DLP Capital Partners, a St. Augustine, Florida-based real estate private equity manager, is making a strong push into Texas and other Sunbelt markets. It is planning to deploy $2.6 billion of capital in 2022 and anticipates 90 percent of that will be focused on debt and equity opportunities in Texas and the Sunbelt.

As part of this move, the firm has just closed on a $74 million loan on a pair of properties in Houston on behalf of Furkan Kalkan, a local private investor.

While the prospect of rising interest rates and worsening inflation are a concern, DLP founder and CEO Don Wenner believes these factors could potentially be a blessing in disguise for the firm’s business model.

“We are a lender, and we’re a bridge lender. If interest rates went up, our rates would be able to go up, which means we earn higher returns. Bridge lending is actually a great hedge against inflation,” said Wenner.

The company is also a borrower for the equity portion of its portfolio, with Wenner noting DLP is not concerned about higher rates. “As a borrower and as an owner, we lock in most of our debt at fixed interest rates. So, if interest rates go up, it doesn’t affect us,” Wenner added.

Sunbelt dreams

The Houston loans are part of a broader Sunbelt expansion. DLP focuses most of its debt and equity investments on up-and-coming neighborhoods in emerging Sunbelt markets that need significant community revitalization.

That strategy dovetailed with Furkan Kalkan’s plans for the Houston complexes, Palms on Westheimer and Huntington at Stonefield. Furkan Kalkan hopes to improve the physical aspects and quality of life aspects of both properties, which total 1,062 units. Kalkan owns Huntington at Stonefield with Market Space Capital.

“Kalkan buys in generally very tough communities with crime issues, drug issues, gang issues, and puts together a focused effort I’ve never, ever seen before of really driving out any negative influences, making these communities a safe place for families to live,” said Wenner.