Knighthead Funding Originates 3 Michigan Loans
The financing will be used for various projects in Detroit, Traverse City and Ann Arbor.
Knighthead Funding LLC, a national real estate finance company, has originated three loans totaling $37.3 million for multifamily projects in Michigan that will provide 215 new units of housing. All three are non-recourse loans that range in term from 18 to 36 months.
Jonathan Daniel, Knighthead Funding principal, said in a prepared statement the three different projects show how Knighthead is a flexible source of capital with a team that was able to structure debt according to the needs of each borrower’s project whether it was mid-construction, ground up or an extensive interior rehabilitation.
The largest transaction was a $17.7 million first mortgage loan to finance the completion of a four-story, 78-unit building with 9,716 square feet of ground-level retail space and 162 parking spaces in Traverse City, Mich. The property will have a mix of studio, one-, two- and three-bedroom apartments featuring high-end finishes, stainless steel appliances, polished concrete floors and washer and dryer units in every residence. Traverse City is the largest city in the 21-county Northern Michigan region and is a popular high-end vacation location that is also growing in popularity with permanent residents.
The firm also provided Greatwater Opportunity Capital a $10.8 million loan for the acquisition and renovation of two multifamily properties in Midtown Detroit’s Cass Corridor. The buildings are located in an opportunity zone and will be redeveloped to offer 118 units and 4,600 square feet of retail space. Extension renovations are planned for both buildings, including upgrading the building systems and exteriors. The Midtown section is one of Detroit’s fastest growing neighborhoods with a 9.2 percent increase in the millennial population and 26 percent growth in technology jobs since 2015. Demand for quality multifamily housing in Detroit has led to annual rent growth of at least 2.5 percent in the market.
The third financing deal is an $8.7 million loan for the construction of The Gallery, a 19-unit condominium building in downtown Ann Arbor, Mich., that is 50 percent pre-sold. The property is located in the Old West Side neighborhood and within walking distance to the University of Michigan. The development sponsorship is headed by Alex de Parry, who founded Ann Arbor Builders Inc., in 1971, and completed the nearby Mark Condominiums in 2016.
Knighthead Senior Associate Peter Illuzzi stated the firm is confident of the success of the business plan based on the sponsor’s development plan, strong presale numbers, unit layouts and downtown location.
The Greenwich, Conn.-based firm closed a loan in March, providing King & George Street LLC with $30.5 million in short-term first mortgage debt for the development of ROOST Charleston, a luxury, full-service boutique hotel and 11,003 square feet of retail in Charleston, S.C. The non-recourse, floating rate loan has a term of 27 months and is the firm’s first financing in South Carolina.
In December, Knighthead provided a $19.1 million, $36 million senior loan to a New York-based investor group to refinance a portfolio of 156 unsold co-op apartments located in Skyview on Hudson in the Bronx, N.Y., and prepare them for sale. In May 2019, Knighthead provided a $75 million, 24-month construction loan to a joint venture of Promanas and Core Development to complete BLVD Sarasota, a luxury high-rise condo project in Sarasota, Fla. The 18-story, 49-unit tower at 1224 Blvd. of the Arts was slated for completion early this year.