Jonathan Rose Cos. is raising its wager on Chicago’s affordable housing market with a plan to buy a Near West Side complex for $17.5 million and put another $46 million into renovations.
After a complicated negotiation involving multiple layers of government and financiers, Rose closed on the 272-unit Barbara Jean Wright Court apartment complex. The seller was the Chicago Community Development Corporation.
The city announced in July that it would issue a bond inducement of up to $45 million to finance the acquisition and rehabilitation of the property at 1354 South Morgan Street between University Village and Pilsen. The development will also receive an approximately $46 million loan from the federal Department of Housing and Urban Development. The total project cost is estimated at $82 million.
“With all the housing markets in the West Loop and Pilsen booming, all – including HUD, the City’s Department of Housing, the state, the alderpersons, the CHA, the tenants and the tenant advocates – were united in our efforts to preserve this critical piece of affordable housing,” Rose’s partner and senior managing director Nathan Taft said in a statement.
Acquiring and preserving existing affordable housing is Rose’s focus. The New York firm has owned, developed and managed more than $1.8 billion in real estate, and has recently been bullish on Chicago. So far this year it’s spent more than $45 million to buy at least three affordable housing assets in the city, including a $25 million deal for the 318-unit Jackson Park Terrace property near the Obama Presidential Center development site.
Among the Barbara Jean Wright complex’s total apartment units, 251 will be marketed as affordable while the other 21 will have unrestricted rents and allow existing market-rate renters to remain on site.
Rose managing director Brandon Kearse and senior project manager Karyntha Walsh negotiated the deal. Kearse said in a statement that it was a lengthy closing process, citing the logistical challenges of rising construction costs and interest rates.
The project received $25.3 million in federal tax credit equity from Enterprise Housing Credit Investments and a $20.3 million construction loan from Huntington National Bank. PGIM Real Estate Finance arranged a $46.9 million FHA mortgage loan. The city is putting $4 million in tax increment financing and $3.8 million in Community Reinvestment Plan funds toward the effort.
The development’s financing also includes Illinois Donation Tax Credits, which the nonprofit Community Opportunity Fund was awarded for US Bank to purchase and provide about $900,000 in additional funding.
The Chicago Community Development Corporation, tasked with assisting the management, improvement and sales of properties within city-designated tax increment finance districts, had owned the property since 1999. The last time it was renovated was more than 20 years ago, according to Rose.
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