CHICAGO: How To Finance Your Apartment Tower
We asked HFF director Danny Kaufman how to make multifamily lenders gaga over you. Three takeaways:
1) Find The Best Dirt
As lenders remain cautious, market-focused projects at A-plus sites rise to the top, says Danny (snapped with his family). Given apartments' supply pipeline, lenders are looking for outstanding real estate. He and executive managing director Matthew Lawton just secured nearly $80M in construction financing (four-year, floating-rate) through Bank of the Ozarks for iStar Financial and JDL Development's 469-unit, luxury 1000 S Clark St project (below) in Chicago's South Loop. Why 1000 S Clark stands out: It's two blocks from public transit, adjacent to the Roosevelt Collection retail mecca, and has amenities including an indoor swimming pool, yoga studio, and full-service dog daycare.
2) Secure Stellar Sponsors
Lenders want to keep capital available for their favorite repeat customers, Danny says. And JDL has quite the recent history in Chicago, including its $158M sale of 1225 Old Town to Heitman and the completion of Halsted Flats, a 269-unit Wrigleyville project. A good sponsor pays attention to the details, all the way down to the exterior architecture and unit/amenity finishes, Danny says. Experience and track record are key, whether it's a local developer or a national firm entering the market.
3) Target Unusual Suspects
Bank of the Ozarks is new to the Chicago lending market (it still thinks Ozark-style pizza is the best), and HFF was able to pique its interest with the all-star JV of JDL and iStar, which designed a wold-class building for one of the South Loop's best development sites, Danny says. His multifamily trends to watch: microunits (above); continued improvements in unit finishes and building perks; and a continued focus on excellent locations with easy access to neighborhoods amenities. Danny's been spending the summer with his wife and 2-year-old twin daughters, taking walks around the block, hitting the swings, and working on swimming.
