Madison Realty, Red Cove lend $131.9M for Edmonds apartments

Madison Realty Capital and Red Cove Capital are lending $131.9 million for a 411-unit apartment project in Edmonds, Wash., 15 miles north of downtown Seattle, Commercial Observer first reported.

Madison supplied $97.5 million of senior construction debt and Red Cove $34.4 million of mezzanine, 26% of the total, or about $321,000 of debt per unit.

A joint venture of the Behar Company and HB Management is the sponsor.

Behar has owned the 20,274-square-foot site at 7212 220th Street SW since 2005, next to its three-building Edmonds Village retail center. The two buildings will range from studios to three-bedrooms, and 20% of units will be income-restricted through the City of Edmonds' Multifamily Housing Property Tax Exemption program. Pricing and loan-to-cost terms were not disclosed.

Red Cove's $34.4 million mezzanine sits behind Madison's senior loan, so it absorbs losses first. Because Behar has held the site since 2005, the collateral is a site rather than a parcel bought at current Edmonds pricing. A debt load of about $321,000 per unit, with 20% of units income-restricted, is the figure to compare on the next Seattle-area construction deal.

Samir Tejpaul, Madison's head of investments, said in a statement that the sponsor's two decades at the site, its development team and an institutional partner in Red Cove give the lender "strong conviction" in Edmonds Green. He said the property sits in a high-income, supply-constrained submarket with direct access to employment centers from Seattle and Bellevue to the aerospace and advanced manufacturing base to the north.

Madison reported $5.6 billion of regulatory assets and 76 employees in its Form ADV filed March 31 with the SEC. The Edmonds loan follows its $463 million financing for the St. Regis Sunny Isles condos on Oct. 27, as Private Wealth Daily previously reported.