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Wauwatosa apartment development gets $20 million HUD loan guarantee

Land and Space

Journal Sentinel business reporter Tom Daykin talks about commercial real estate and development.

Jan. 25, 2011
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By Tom Daykin of the Journal Sentinel

Jan. 25, 2011 0

A high-end apartment complex proposed for Wauwatosa has obtained a $20 million federal loan guarantee, and the developer says construction will begin this spring.

The Enclave, with 152 units, is planned for a 4-acre property formerly occupied by Derse Inc,. at 1234 N. 62nd St. Developer HSI Properties proposed the $24 million project a year ago.

HSI announced Tuesday that the U.S. Department of Housing and Urban Development has approved a federal government-backed guarantee for a $20 million loan. The loan is being arranged through Grandbridge Real Estate Capital LLC.

The former Derse building will be demolished within 30 days, and construction of the apartments will begin in April, said Ryan Schultz, an HSI principal.

Along with equity capital, The Enclave's financing includes $1.5 million provided by the City of Wauwatosa through a tax incremental financing district.

HSI will be allowed to recover that amount, which will help pay for environmental cleanup costs and other site preparation work, through property tax refunds. The Common Council approved the city financing last year, and the development agreement includes HSI donating 2 acres to the city for use as a park.

The Enclave is to be completed by May 2012, and will feature apartments with one, two and three bedrooms. It will include underground heated parking, an outdoor pool, exercise facility and business center.

The apartments will rent for around $1.40 a square foot, Schultz said. There will be a variety of floor plans, but a 1,000-square-foot, two-bedroom unit would rent for around $1,400 a month.

The renters will likely include people working at the Milwaukee County Research Park and Milwaukee Regional Medical Complex, both in Wauwatosa, as well as people working in downtown Milwaukee and Brookfield, Schultz said.

The federal loan guarantee provided for The Enclave comes from the same program that guarantees the main loan that is financing The Moderne apartment high-rise, now under construction in downtown Milwaukee.

If the borrower defaults on its loan, the money to cover any loss by the lender comes from a federal fund generated by mortgage insurance premiums that borrowers pay to HUD.

Also, the agency can recover part of a loss by selling the loan secured by the property.

The Enclave will be owned by a private investor group led by Schultz and HSI principal Brett Haney.

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About Tom Daykin

Tom Daykin covers commercial real estate and development.

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Helpful Links and Resources

Check the Milwaukee Assessor’s Office website, which includes tools to look up property assessments.

Find property assessments for other communities throughout the state at AssessorData.org.

The Milwaukee Department of City Development website includes information on the city Plan Commission and Redevelopment Authority.

The Commercial Association of Realtors Wisconsin offers information on commercial realtors and real estate.

The Milwaukee chapter of the Institute of Real Estate Management serves the needs of real estate management professionals

The Wisconsin chapter of the NAIOP Commercial Real Estate Development Association aims to serve developers and owners of commercial real estate.

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The judges said, "Daykin’s aggressive reporting and accessible, explanatory writing make him a must-read for his tight-knit and highly engaged audience."


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