JV Breaks Ground on $200M Project

A 250-unit mixed-use asset breaks ground in Maryland; North American Properties gains approval for a $600 million development in Georgia; and Red Mortgage Capital Funds a $9.6 million FHA 221(d)(4) loan for a historic property rehabilitation.

Lot 31

Bethesda, Md.—Construction has begun on Lot 31, a 250-unit mixed-use project located in Bethesda, Md., four months after StonebridgeCarras and PN Hoffman formed a joint venture with Northwestern Mutual to develop the $200 million property.

The project, which will is being built on a site formerly occupied by two Montgomery County parking lots, will contain 40,000 square feet of retail and 950 parking spaces. Lot 31’s 250 units will be comprised of 162 affordable and market-rate apartments at The Flats, and 88 condominiums at The Darcy.

The property should be opening its rental, condo and retail doors in winter of 2015.

North American Properties gets approval for $600M development

Alpharetta, Ga.—North American Properties has received key approvals to begin the $600 million resort-style development known as Avalon. The mixed-use project will include high-end retail, restaurant, residential, office, hotel and public space in the suburb located north of Atlanta.

“Alpharetta is an affluent community and locals want and deserve a luxury shopping experience they can’t currently find in the Southeast,” says Mark Toro, managing partner at NAP. “We are thrilled that the Alpharetta community has embraced our vision for Avalon.”

The for-rent residential portion of the development will include 250 luxury units situated over retail. The mix will include 150 one-bedroom units and 100 two-bedroom units with rents that average $1,400.

Red Mortgage Capital Funds $9.6M 221(d)(4) for historic property rehab

Chicago—Red Mortgage Capital LLC announced it processed and funded a $9.6 million FHA 221(d)(4) insured mortgage commitment through HUD Chicago for the historic Pullman Wheelworks, a 210-unit affordable housing apartment building on Chicago’s south side. The FHA commitment was secured just 41 days following submission of the application.

Project sponsors Mercy Housing Lakefront and National Housing Trust/Enterprise Preservation Corp. recently hosted a tour of the newly acquired property to highlight the latest preservation strategies they are employing together to address the region’s affordable housing crisis. Attending the gathering was Shaun Donovan, U.S. secretary for Housing and Urban Development.

Pullman Wheelworks, built in 1903 as part of a working community developed by railroad industrialist George Pullman, is listed on the National Register of Historic Places and is being redeveloped and preserved as part of an overall neighborhood revitalization plan anticipated to occur over the next several years.

The substantial rehabilitation of the project, scheduled for completion in approximately 18 months, will include major renovations to kitchens, bathrooms and balconies, new windows throughout, and new and expanded common space areas. Having last been rehabbed in 1980, the revitalization will ensure the long term economic viability of the project, thereby preserving essential housing for the low income residents of the area. The project has 122 one-bedroom units; 28 two-bedroom units; 54 three-bedroom units and 6 studio units. The community is fully leased at present except for 10 leases that were allowed to lapse in order to provide temporary housing for tenants while their own units undergo renovation.

The financing had multiple layers of capital and a very tight time frame in which to secure the FHA commitment – a key component of the financing. Ultimately, the complex structure utilized 11 sources of capital including tax-exempt bonds issued under the U.S. Treasury’s New Issue Bond Program, historic tax credits, 4 percent low income housing tax credits (LIHTC), and HOME loans.

Three levels of government – HUD, Illinois Housing Development Authority and the City of Chicago – came together through the John D. and Catherine T. MacArthur Foundation-sponsored initiative known as the Preservation Compact, a city-wide effort to stem the loss of affordable rental housing in the Chicago area. Community Investment Corp. and National Affordable Housing Trust also played key roles that contributed to the purchase of the property.

Red Mortgage Capital’s senior managing director, John K. Powell says, “HUD Chicago was exceptionally timely and responsive. Their delivery of an FHA Commitment just 41 days after submission demonstrates considerable effort and a dedication to furthering their mission – to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD was integral in helping to make this transaction happen in a tight timeframe so that other deadlines could be met successfully, and we applaud them.”

“We were pleased to welcome the Secretary to Chicago to showcase the preservation of this historic building and the community development occurring in the neighborhood,” says Mark Angelini, senior vice president, Real Estate Development for Mercy Housing Lakefront. “The many layers of financing employed in the purchase of the building were significant to help us overcome barriers to buy the property. We thank the many partners who contributed.”