Riverside Secures HUD Loan to Jumpstart West Loop Resi

A stalled West Loop apartment project is back on track after its developer secured a construction loan to move forward.

Riverside Investment & Development obtained a $64 million loan backed by the U.S. Department of Housing & Urban Development to launch an $85 million, 199-unit rental building at 566 West Van Buren Street. The financing, arranged by Draper and Kramer, unlocks a project the firm shelved as rising costs and volatile interest rates froze much of Chicago’s development pipeline, according to Crain’s.

The 12-story building, first proposed in 2022, is now slated for completion in early 2027. Equity for the deal is coming from Riverside’s partners, including Blue Star Properties and Metropolis Investment Holdings, a German family office.

Riverside Executive Vice President Mike Potter told the outlet that the deal has been in the works for several years, noting the firm explored multiple avenues before landing on the HUD-backed debt.

“Capital markets today are very constrained … To get things done these days, it requires a lot of creativity,” Potter said.

The loan came through HUD’s 221(d)(4) program, which offers fixed-rate, fully amortizing financing for up to 40 years, a rare set of terms in today’s environment, according to the outlet. Riverside executives said locking in a rate in the mid-5 percent to low-6 percent range was a key advantage, as developers contend with unpredictable borrowing costs.

The project’s relatively modest scale also helped push it over the finish line, according to Potter.

Chicago’s multifamily pipeline has thinned dramatically in recent years, with few large-scale projects breaking ground as both debt and equity became harder to secure. That slowdown is beginning to ease, but new supply remains limited. Roughly 800 units are expected to be completed in 2026, followed by about 2,100 in 2027, according to Integra Realty Resources.

Tight supply has also fueled rent growth, particularly at the high end. Net effective rents at top-tier downtown buildings rose about 8.6 percent in the fourth quarter, year-over-year, according to the publication. Riverside is aiming to undercut nearby luxury towers, projecting rents at about $4.25 per square foot.

The development also sidesteps Chicago’s Affordable Requirements Ordinance because it’s being built as of right, avoiding City Council approval.

— Eric Weilbacher