$44,100,000 JV Equity & Construction Loan
Highland Realty Capital successful arranged full capitalization of The Union, a 110-unit TOD apartment development located in an opportunity zone adjacent to the West Oakland BART Station. On behalf of Holliday Development, Highland sourced $18.1mm of joint-venture equity from a pension fund advisor and $26 million of debt from a regional bank to fund the vertical development of the project, which also included 3,000 square feet of ground floor retail. The units were built off-site via Vallejo-based Factory_OS. Facotry_OS constructs the modular component as a 100% union-employed facility, making it the only viable option for developers who want to build off-site, but have a prevailing wage requirement. Building the units off-site will condense the construction timeframe down to approximately 12 months, 8-12 months less than typical timeframes. The shortened construction period reduced the loan interest reserve requirement, along with other time-sensitive capitalized costs, thereby increasing the yield on this investment. Most importantly, the risk of the investment is significantly reduced by putting the construction process under one roof, removing externalities such as weather, traffic, and other onsite hazards. On a risk-adjusted basis, this development offered double the return of normal apartment projects.