Dallas-Based Preston Hollow Community Capital Launches $200M IPO

Dallas-based Preston Hollow Community Capital, a provider of specialized impact financing for community projects nationwide, has launched an initial public offering, it announced today.

The offering of 10,526,316 shares of Class A common stock at an initial price between $18 and $20 would raise $200 million at the pricing midpoint. It plans to list on the NYSE under the symbol PHCC. According to IPO research firm Renaissance Capital, the IPO is expected to price next week.

$3.7 billion in financing since 2014

Preston Hollow was founded in 2014 by Chairman and CEO Jim Thompson, who’d previously spent 22 years as CEO of Dallas-based ORIX USA. Other top executives from ORIX also joined the new firm.

According to Preston Hollow’s SEC filing, the firm has originated $3.7 billion in financing since its inception, with 29 consecutive quarters of positive net income. The firm reported having an 11.7 percent compound annual growth rate in book value per share since inception through March 31, 2021.

The filing shows Preston Hollow had $121 million in total revenues in 2020, a possibly pandemic-related drop from its $140 million revenues in 2019. Like many companies nationwide, it’s bounced back strongly in 2021, with a reported $41 million in revenues in the first quarter alone.

Prior to its public offering, the firm was known simply as Preston Hollow Capital. The new name reflects Preston Hollow’s longtime focus on improving and renewing communities.

Aiming for positive social impact

Preston Hollow calls itself the “S” in ESG finance—the “social” in Environmental, Social, and Governance financing. The firm aims for social impact by investing in projects that create transformational community outcomes.

The goal: solving societal problems and addressing local needs and opportunities. Preston Hollow says it works with local government and nonprofit leaders to help finance projects that address one or more of the United Nations Sustainable Development Goals—while delivering a nice return to Preston Hollow’s investors, of course.

Two key Texas investments

Locally, Preston Hollow invested $115 million toward construction of the Westin Irving Convention Center Hotel at Las Colinas, which opened in 2019.

Preston Hollow also invested $22.3 million in San Antonio’s Brooks Opportunity Zone, an economic development engine featuring a 350,000-square-foot facility on the site of the former Brooks Air Force Base.

Investing in healthcare

Communities need good healthcare, so Preston Hollow has invested in a number of medical centers—including a $132 million investment in the Richmond University Medical Center on New York’s Staten Island, which helped construct a 35,000-square-foot ER and a co-generation power plant, among other improvements.

A $125 million Preston Hollow investment in the El Centro Medical Center in El Centro, California, helped the hospital modernize its facilities, add a new 29,000-square-foot service building, and prepare for new seismic safety standards.

Funding university projects

Higher education has been another key Preston Hollow investment focus. The firm invested $195.8 million in debt restructuring for Chicago’s Roosevelt University; $83.5 million in an array of new projects and refinancing for Drew University in Madison, N.J.; and $59 million to finance academic programs and student services at Eastern Michigan University.

Mixed-use development financing

Preston Hollow financed a $48.9 million tax increment transaction to help build Pinecrest—a large retail, residential, and entertainment district in the Cleveland, Ohio, suburb of Orange Village. The 58-acre site includes a hotel, apartments, offices, a movie theater, and restaurants and retail, and provides surrounding communities with a year-round schedule of public events and festivals.

Assisting in the IPO

J.P. Morgan and Barclays are acting as joint book-running managers of the IPO and are also representing the underwriters. UBS Investment Bank and Piper Sandler are also acting as joint book-running managers, with Deutsche Bank Securities and Loop Capital Market acting as co-managers.