Walker & Dunlop, Inc. announced that it has arranged $44.6 million in construction and permanent financing through the United States Department of Housing and Urban Development (HUD) for 30 E. Adams Street in Chicago, IL. The loan will enable the adaptive reuse of the 92-year-old office building into 176 market rate multifamily units with ground level retail.
Leading Walker & Dunlop’s team, Carolyn McMullen and Kyle Peterson arranged the financing for first-time HUD borrower Cedar Street Companies. Based in Chicago, Cedar Street has successfully converted several similar historic buildings into multifamily projects.
“Walker & Dunlop was instrumental to providing an optimal debt facility to meet Cedar Street’s multiple goals for this project, primarily long-term ownership at a historically low cost of capital,” said Erik Larson, Cedar Street managing director of finance. “Because of its wealth of contacts and product knowledge, Walker & Dunlop was able to arrange a long-term, very low interest rate product that will allow us to maximize the historic value of this building and deliver once in a lifetime returns to our investors.”
Using HUD’s 221(d)(4) program, Walker & Dunlop allowing the developer to capitalize on savings from the existing historic tax credits. The team also implemented HUD’s green mortgage insurance premium, making this the first ever mixed-use project to receive such benefits. The fully amortizing loan allowed the borrower to remove their interest rate risk by locking in the rate on a 40-year term with two years of interest-only payments.
“This was a complex financing with a lot of moving parts. We were fortunate to be working with a sophisticated and experienced partner in Cedar Street,” said McMullen, senior vice president of Walker & Dunlop’s FHA finance group “The Chicago HUD office’s direction and commitment to working with Walker & Dunlop was instrumental in our ability to structure and close the complex 221(d)(4) loan in December to meet the borrower’s timing constraints.”
Once complete, 30 E. Adams Street will include a rooftop deck, fitness center and a new retail outlet on the ground floor adjacent to McDonalds and the historic Millers Pub, two existing tenants who will continue to occupy their respective spaces. The property is a transit-oriented development, located next to an “L” stop, and just blocks from shopping and cultural attractions.