At a glance
- The borrowers are a joint venture of Revive Capital Development and KAI Design + Build, and the financing package includes tax credits for historic rehabilitation.
- The redevelopment, called the Upton, will convert the 11-story, 200,000-square-foot building at 121 South Meramec Avenue into studios, one-bedrooms and two-bedrooms, with a fitness center, heated outdoor spa, dog wash, game room and fire pits.
- Advisors underwriting conversion loans can use the per-unit debt as a benchmark: $48.25 million works out to about $409,000 per apartment, or $241 per square foot across 200,000 square feet.
Octagon Finance provided a $48.25 million unitranche construction loan to convert the former 7Up global headquarters in Clayton, Mo., into 118 apartments, Commercial Observer reported Oct. 26. The borrowers are a joint venture of Revive Capital Development and KAI Design + Build, and the financing package includes tax credits for historic rehabilitation.
The redevelopment, called the Upton, will convert the 11-story, 200,000-square-foot building at 121 South Meramec Avenue into studios, one-bedrooms and two-bedrooms, with a fitness center, heated outdoor spa, dog wash, game room and fire pits. The building has been vacant for more than a decade; 7Up relocated from Clayton to Dallas in the late 1970s.
Advisors underwriting conversion loans can use the per-unit debt as a benchmark: $48.25 million works out to about $409,000 per apartment, or $241 per square foot across 200,000 square feet. The report does not give total development cost, pricing, term or how much of the package is tax credits, so loan-to-cost cannot be calculated.
Zach Bubrosky, head of originations for Octagon Finance, said historic tax credit projects carry construction constraints. "When you're doing these historic tax credit projects, you have to maintain the historic integrity of the building," he said, according to Commercial Observer, adding that the property will display pictures of various 7Up bottles. He described adaptive reuse as a fit for a historic building and for an area short on housing for young professionals near Washington University in St. Louis.
Clayton, about 10 miles west of St. Louis, holds the global headquarters of Enterprise Rent-A-Car, Centene, Emerson Electric and Graybar, which Bubrosky cited as demand drivers. The site is also where 7Up launched its Uncola campaign in 1968. Because the building is vacant, the demand case rests on those employers and the university rather than on signed leases, and the historic-preservation standard shapes how the shell is rebuilt, which suggests the finished collateral will be valued against that constrained scope.
A conversion loan priced per unit
Reported by the Real estate debt desk from Commercial Observer. Published . Corrections