D2 Capital Advisors has successfully arranged a $35.83 million construction financing package for the Somerset Phase II development in Philadelphia, a significant step in the Riverwards Group's Somerset Station master plan. This financing includes a $19.87 million senior construction loan from Silver Heights Capital and $15.96 million in Commercial Property Assessed Clean Energy (C-PACE) financing from Nuveen Green Capital, marking a strategic financial move for the 170-unit multifamily project.
What Happened
The latest phase of Somerset Station, located at 2202 E. Somerset Street in Philadelphia's Port Richmond neighborhood, is a continuation of Riverwards Group's ambitious urban development plans. D2 Capital Advisors, under the leadership of Jack Cortese and David Frankel, structured this financing to maximize proceeds while minimizing the overall cost of capital for the developer. The project, which spans 146,158 square feet, will feature a mix of studio, one-bedroom, and two-bedroom units, as well as on-site garage parking. The financing package, combined with over $10 million in sponsor equity, supports a total project cost of approximately $46 million. Urban Renewal Builders, an affiliate of Riverwards Group, is tasked with the construction of this phase, which is expected to be completed by early 2028. The financing arrangement benefits from a grandfathered 10-year, 100% real estate tax abatement, a significant incentive for investors and developers alike.
What This Means for Your Business
For AECM professionals and government contractors, the Somerset Phase II financing highlights the potential of leveraging combined senior debt and C-PACE financing to achieve favorable financial outcomes. This approach not only reduces the cost of capital but also enhances the project's financial viability through non-recourse financing structures. The success of Phase I, which was sold to the Philadelphia Housing Authority for $58.1 million, underscores the importance of proven site performance in securing substantial financing packages. As the construction industry continues to navigate economic uncertainties, strategic financial structuring, such as that demonstrated in this project, can offer a competitive edge and improve return on investment.
What US Operators Should Watch
Industry stakeholders should keep a close eye on the progression of Somerset Phase II as it sets a precedent for future developments under the Somerset Station master plan. With an expected delivery in early 2028, the project will likely influence upcoming federal and state-level funding opportunities, particularly those related to sustainable development and energy-efficient financing options like C-PACE. Additionally, the grandfathered real estate tax abatement could serve as a model for similar projects seeking to optimize financial incentives. As the project progresses, monitoring regulatory changes and potential policy shifts in urban development funding will be crucial for maintaining competitive positioning.
Source: https://pulse2.com/d2-capital-advisors-arranges-35-83-million-construction-financing-for-somerset-phase-ii-in-philadelphia/. Read the original story ->
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