The bonds are backed by future revenues generated by the project, meaning investors are wagering that the development will be built out and populated. — Bloomberg
HOUSTON: In suburban Texas, a neighbourhood complete with an amphitheatre, dance hall and goat farm is scheduled to be erected 65 km from Houston’s downtown – providing municipal-bond investors a window to bet on one of the fastest-growing areas of the United States.
In a transaction that priced this week, a municipal authority sold high-risk, tax-exempt bonds to finance infrastructure associated with a housing development dubbed Two Step Farm.
The planned community stretches more than 800 ha in Houston’s metropolis. The first phase will have more than 1,000 homes priced between US$350,000 and US$1mil, as well as parks and amenities.
The bonds are backed by future revenues generated by the project, meaning investors are wagering that the development will be built out and populated.
Texas metros are seeing the most sustained population growth of all the nation’s major cities this year, according to US Census Bureau data.
Houston added nearly 140,000 people to its population this year, following closely behind Dallas. San Antonio and Austin also ranked in the top 10 of the largest increases in new residents.
“Texas is a high-growth state, and Houston’s a high-growth area. So this is something where the demographics really do support building this development,” David Mann, senior investment analyst at Manulife Asset Management, said.
“Families are going to move here. They’re gonna work in the area. That’s the thing that’s attractive about it.” — Bloomberg
