TAILOR LOFTS FIRST CAME across Bob Clark's desk back in 2007, and even pre-recession there was question as to whether to redevelop the historic downtown Chicago office building into a student housing community.
“We took a fair amount of time over the course of that year just trying to get our arms around what we were taking on,” recalls Clark, the executive vice president of Place Management Group, a division of Atlanta-based student and military developer and owner/operator Place Properties. “We finally ended up buying the building in early 2008 with the expectation of delivering the community for 2009 lease-up.”
That was right before the onset of the recession and accompanying capital markets freeze that left the firm much like a student with an acceptance letter to Harvard and zilch in terms of financial aid to afford tuition.
While Place was concurrently raising some $280 million for the Place/BV Student Housing Fund, a joint venture with Chicago-based Blue Vista Capital Management, it was neither timely nor prudent to completely self-fund a historic rehab with 100 percent equity that was earmarked for the creation of a broader student housing portfolio.
“Our fund strategy very simply is to aggregate a portfolio of student housing assets around the country,” Clark says.
So, after waiting it out for a year, Place obtained a three-year construction loan from US Bank. The $33.5 million loan is complemented by equity from the Place/ BV Student Housing Fund as well as historical tax credit equity from credits syndicated by US Bank.
In total, the $58 million redevelopment capital stack will be used to completely gut the former office building and create one- and two-bedroom student lofts: 477 beds in 135 fully-furnished units with private bathrooms. When they're not cramming for midterms in the community's computer lab or study rooms, students will enjoy additional over-the-top amenities including wireless Internet, a 42” Plasma TV and DVR in every unit, an activity center with pool tables and gaming systems, a 24-hour fitness center, and of course, the requisite high-pressure tanning dome.
Development is expected to be completed this summer in time for a 2010 fall semester lease-up.