Hanover Lands $87M Construction Loan for San Jose Apartments

The Hanover Company has secured an $87.4 million construction loan to build a 345-unit apartment complex in north San Jose.

The Houston-based developer landed the loan from Citizens Bank to build the mixed-use building at 905 North Capitol Avenue, the San Jose Mercury News reported.

In addition to project financing, the development was boosted by $4.9 million in fees and taxes waived by the city to encourage home building.

Without the waiver of in-lieu fees and 50 percent reduction of construction taxes approved by the city last year, the seven-story project on a 2.1-acre site near the Penitencia Creek Light Rail Station would have never gotten off the ground, Hanover executives said.

“With the city council action to reduce fees, the financing is secured and construction is beginning this week,” Scott Youdall, a regional development partner at Hanover, told the Mercury News.

Plans call for 345 apartments, of which 328 units would be market rate and 17 affordable for moderate-income households. They would sit atop 2,900 square feet of ground-floor offices and an underground parking garage for an unspecified number of cars.

The gray-and-white complex, designed by KTGY Architecture + Planning, will have a clubroom, fitness center, courtyards and a swimming pool deck.

A project cost and development timeline were not disclosed.

It will be built near 32 townhomes that Trumark Homes is developing down the street, according to the Mercury News.

Hanover, founded by Murray Bowden in 1982, has developed multifamily and industrial properties in 12 states, including more than 56,000 apartments and $12 billion in project capitalization, according to its website.

In February, Hanover landed $120.4 million in construction financing to build 1,140 apartments on top of a historic persimmon orchard and Tsukuda Fruit Stand at 2620 Seely Avenue.

— Dana Bartholomew