$18 million of joint-venture equity and $26 million of construction debt
110-unit Apartment Development
West Oakland, CA
Highland Realty Capital is pleased to announce the successful capitalization of The Union, a 110-unit apartment development located in an opportunity zone adjacent to the West Oakland BART Station. Highland sourced $18 million of joint-venture equity and $26 million of construction debt to fund the vertical development of the project, which will also include 3,000 square feet of ground-floor retail.
The units will be built off-site via Factory_OS, located on Mare Island in Vallejo, which is also in an opportunity zone. Facotry_OS, or “The Factory”, began operations this year 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 and potential returns 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.