HUD backs $64M apartment loan

A Chicago apartment deal that had been stuck since 2022 just got unstuck with federal backing: Riverside Investment & Development closed a $64 million loan tied to a 199-unit building at 566 West Van Buren Street in the West Loop, with completion now targeted for early 2027. (therealdeal.com) The full project cost is about $85 million, and the building plan now calls for 12 stories instead of the taller version first floated a few years ago. Riverside’s equity partners include Blue Star Properties and Metropolis Investment Holdings, which The Real Deal identified as a German family office. (therealdeal.com) This was not a normal bank construction loan. The financing came through the Federal Housing Administration’s Section 221(d)(4) program, which insures loans for new multifamily construction and can stretch fixed-rate, fully amortizing debt out as long as 40 years. (hud.gov 1) (hud.gov 2) That long, fixed loan is the whole story here. Riverside told local outlets it locked in a rate in the mid-5 percent to low-6 percent range after a period when rising construction costs and volatile interest rates froze much of Chicago’s apartment pipeline. (therealdeal.com) The address matters almost as much as the financing. The site sits at Van Buren Street and Jefferson Street, a short walk from the Chicago Transit Authority Blue Line’s Clinton station and from Chicago Union Station, which puts it on the edge of downtown job corridors instead of deep inside the priciest tower cluster. (chicago.urbanize.city) (chicagoyimby.com) The building is being aimed below the very top of the market, not at it. Riverside said rents are expected around $4.25 per square foot, which would be a slight discount to nearby luxury competition even though the project still includes features like a rooftop pool deck, a dog run, retail space, parking, and bike storage. (riversideid.com) (ward42chicago.com) That pricing choice lands in a city with less new supply than many expected. Integra Realty Resources data cited by Riverside and The Real Deal shows about 800 apartment units are expected to be completed in 2026 and about 2,100 in 2027, after a financing drought that kept many projects from starting. (riversideid.com) (therealdeal.com) At the same time, downtown pricing has kept moving up. Net effective rents at top-tier downtown Chicago buildings rose about 8.6 percent year over year in the fourth quarter, which helps explain why a developer would revive a shelved project even with borrowing costs still far above the near-zero era. (riversideid.com) (therealdeal.com) One more Chicago detail: this project is being built as of right, which means it did not need City Council zoning approval. Riverside said that also means it is not subject to Chicago’s Affordable Requirements Ordinance, the city rule that often requires 20 percent of units in new residential projects to be offered at affordable rates. (riversideid.com) So the immediate takeaway is simple and concrete. Chicago did not just get another rendering or another “planned” tower this week; it got a funded, permitted, 199-unit building near major transit, with federal insurance making the math work and early 2027 set as the delivery date. (chicagoyimby.com) (therealdeal.com)