CIT, Square Mile Provide $64M in Construction Debt for Boston Resi High-Rise


CIT Bank and Square Mile Capital Management have teamed up to provide $63.9 million in construction debt to a joint venture between Saugus, Mass.-based Procopio Companies and The Carlyle Group for the development of a 259-unit rental in Lynn, Mass., just north of Boston, according to information from the lenders.  

The construction debt package included a $51 million loan from CIT and a $12 million mezzanine piece from Square Mile, Procopio Principal and Vice President of Development, Mike Procopio told CO.

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“This transaction allowed us to further expand our lending portfolio in Boston by capitalizing an asset that will be well-positioned as one of the highest quality apartment buildings north of Boston with strong transit accessibility,” Square Mile Capital Vice President Mike Kusy said in prepared remarks.

The proceeds will erect The Caldwell, a 180,000-square-foot, transit-oriented rental high-rise that will include ground floor retail space. Greystar will manage the asset, Procopio said.

“Because of the size [of this development], we went out to an LP partner; the bigger institutional guys had a bunch of interest, but we clicked with Carlyle because they bought into Lynn,” Procopio said.

Jeff Black and Sean Burke out of Colliers (CIGI) International’s Boston outpost arranged the debt.

Procopio said his firm “went out with the debt package to a wide array of lenders,” from local to national players, and benefitted from a hefty amount of competition from banks and debt funds. He said CIT and Square Mile were each competing for the whole loan before teaming up to tackle the debt package.

“We typically only want to deal with one lender. But, we had been talking with them individually, and when they found out they were both looking, they said, ‘Hey let’s gang up; it’s better for everyone,’” Procopio said. “It reduced CIT’s exposure, and with Square Mile taking a mezz piece, it was right in their wheelhouse.

“[CIT and Square Mile] gave us the bang for the buck and the most leverage,” Procopio added. “And the two, having worked together before, smoothed out the process.” He declined to provide specific financing terms.

The planned 10-story, market-rate apartment development will cost $85 million, according to Procopio. The project is currently under construction and the firm is looking to start a phased occupancy in the third quarter of 2020, followed by an 18-month lease up for stabilization, he said.  

Located at 34 Munroe Street in downtown Lynn, the building will sit across the street from the town’s Central Square MBTA [Massachusetts Bay Transportation Authority] train stop, a 15 minute ride into North Station, leading into Boston’s financial district downtown.

“The Greater Boston area remains a strong market for residential development, especially where there is ready access to mass transit,” Matt Galligan, president of CIT Real Estate Finance, said in a prepared statement.

The Caldwell will feature a rooftop deck, a swimming pool, a fitness center and a sports and gaming lounge.

A representative for CIT did not immediately respond to an inquiry.