For Workforce Housing, Construction Debt Still Clears

Lenders are still writing construction checks for workforce housing, and VIC Partners has just cashed one in Fort Worth, where OakNorth Bank provided a $36.5 million primary construction line for Vic Centre, a 268-unit workforce rental community, as part of a $48 million joint financing with Hickory CRE Capital, a commercial real estate lender; Concord Summit Capital arranged the debt, Connect CRE reported.

The project at 7120 Anderson Blvd., outside Loop 820 and north of Interstate 30, will deliver nine three-story residential buildings plus a clubhouse, fitness center, pickleball court, business center, and 402 parking spaces, developed by VIC Partners and M-13 Construction at a construction cost VIC puts at $41.7 million.

At $41.7 million, the construction cost comes to about $156,000 a unit, and the $36.5 million primary line is roughly 88 percent of that, or $136,000 a door; the full $48 million facility runs $6.3 million above the estimate, about $179,000 a unit. The 'primary' label suggests the line sits at the top of the stack, with the remaining $11.5 million of the joint financing completing the structure, though the coverage does not disclose the rate, the term, how OakNorth and Hickory split the debt, or what occupies the gap. The per-unit math puts the loan well above a bare-bones basis.

Workforce housing anchors rent to local wages rather than peak market rates, and that narrower underwrite is what makes the deal financeable. Lenders are underwriting a rent roll that can be defended from the first lease, rather than a comp sheet that assumes every unit reaches top-of-market; if Vic Centre delivers on budget, the risk is execution and lease-up rather than a bet on market-rate growth. They are not paying for a brand; they are paying for a rent roll that works at wage-based levels, the construction-stage version of the reset this publication has argued is playing out across small and mid-sized apartments: capital clearing deals priced on current cash flow, with sponsors who accept that basis setting the next comps.

Those comps are now being set in Fort Worth, on a 268-unit project with a pickleball court. The number to watch on the next workforce deal is the $11.5 million beyond the primary line, because in a construction stack, that is where risk concentrates.