Barings Provides $45M Construction Loan for North Carolina Multifamily Project
By Cathy Cunningham September 12, 2018 12:35 pm
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Barings Multifamily Capital has provided $44.8 million in senior construction debt for the development of Piedmont, a 382-unit multifamily property at 6250 Triangle Town Boulevard in Raleigh, N.C., Commercial Observer has learned.
Avison Young’s Dan Gorczycki, Aaron Prager and Jon Epstein negotiated the financing on behalf of developers Douglas Smolev and William Riehl.
The 43-year Department of Housing and Urban Development (HUD) loan has an interest rate of 4.65 percent.
Originated under HUD’s (221) (d) program—the non-recourse loan is fixed and fully amortizing for 40 years, which doesn’t include a three-year interest-only fixed rate during the property’s construction period.
In addition to the construction debt, Avison Young arranged $4.8 million in partner equity in the deal, bringing the transaction’s total capitalization to $49.6 million.
“The strong demand for rental housing in Raleigh helped us source multiple debt and joint venture equity options,” Gorczycki told CO. “In the end, we were able to secure an 85 percent debt option with an interest rate in the mid-4’s and an aggressive equity partner for the developer.”
The transaction marks developers Smolev and Riehl’s first transaction in the Raleigh market. To counterbalance rising land, labor and construction costs in the area, Avison Young arranged the HUD construction loan with high loan-to-cost proceeds and a low rate compared with more conventional financing options.
When completed, the property will sit close to Triangle Town Center—CBL Properties’ 110-acre, 165-store shopping mall, which is anchored by Macy’s and Saks Fifth Avenue, roughly eight miles from Downtown Raleigh.
According to Avison Young’s mid-year 2018 office report, strong economic growth and disciplined construction activity have positioned the Raleigh-Durham office market well for continued health. While construction activity has increased, it remains in line with demand and—unlike in previous cycles—current expansion has not been marked by overbuilding, due largely to restraint on the part of lenders, according to the report. Apple is also reported to be considering the region for a new corporate campus that could generate as many as 5,000 new jobs.
Officials at Barings didn’t immediately return a request for comment. Smolev and Riehl could not immediately be reached.
