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PNC Delivers Creative Agency Financing
Pre-Stabilization Deal Helps Long-Term Client Acquire Desirable Property near Downtown Chicago
PNC delivered financing for an “off market” transaction brokered by correspondent Cushman & Wakefield so that The Habitat Company could acquire a luxury, high-rise multifamily building known as One 333 in Chicago. The $125 million acquisition was made possible through the Fannie Mae near-stabilization lease-up program.
Beyond stabilizing the building’s occupancy, Habitat plans to upgrade the lobby and common areas and to bring the overall amenity package closer to renters’ expectations.
The Habitat Company’s Chairman, Daniel Levin, founded the firm in 1971 following the successful completion of South Commons, a 1,500-unit development on Chicago’s South Side. Today, the company has more than $3 billion in assets and more than 23,000 units under management in five states. Habitat is a repeat Fannie Mae and PNC borrower with a track record of consistent success.
The 305-unit property on South Wabash is less than a mile south of downtown Chicago, close to Grant Park, the Museum Campus, Lake Michigan, dining, grocery stores and mass transit. The building was constructed in 2016 next to a for-sale condominium building by the same developer. The lack of amenities and finish selections, typical of market-rate rental properties, among other factors, contributed to an extended initial lease-up.
With decades of combined experience in the multifamily industry, Levin, along with the firm’s President, Matt Fiascone and Vice President of Investment and Finance, Bryan Sullivan, saw great potential in One 333. They worked with Jeffrey Cohen of Cushman & Wakefield to structure an “off market” acquisition and turned to PNC to deliver the financing to acquire the building.
Due to the unusual circumstances, the property’s occupancy was not going be fully stabilized at the time of the sale and it was estimated that it would take 150 days post-closing to achieve the cash flow typical of a fully stabilized building, which was beyond the standard requirements for the Fannie Mae program.
Furthermore, Habitat required a loan where there would be no adverse ramifications if the required stabilized occupancy was not achieved within the required timeframe post-closing.
The Habitat Company maintains a strong presence and track record in the sub market where One 333 is located, and their long-term relationships with Fannie Mae and PNC were instrumental in obtaining their approval to fund a loan at terms that were outside program guidelines in a market experiencing a lot of new multifamily supply.
“A number of financial institutions competed for the deal,” recalls Matt Fiascone, President of The Habitat Company. “We reached out to PNC because we have come to trust them due to our longstanding business ties, the shared relationship with Fannie Mae and PNC’s proven ability to execute. We had a tight timeframe for the One 333 transaction and there were significant deposits at stake. PNC came through for us.”
Date: September 2017
Location: Chicago, Illinois
Financing Amount: $79.172 million
Financing Type: Fannie Mae conventional multifamily
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