Sursum Corda Redevelopment Update 12/18/20
Toll Brother/L+M JV Secures $160M in Construction Financing
Toll Brothers, Inc. has announced the closing of $160 million in construction financing through a newly formed joint venture between its Toll Brothers Apartment Living rental subsidiary and GSLM Capital Partners, a venture of L+M Development Partners and Goldman Sachs Urban Investment Group. The financing will be used to develop Phase 1 of a 6.7-acre site in the heart of Washington, D.C., located at the nexus of NoMa, Mount Vernon Triangle and Shaw – three fast-growing and vibrant neighborhoods northwest of Union Station. Phase 1 will bring 561 units, approximately 20% of which are affordable, one-acre of public open space and nearly 50,000 square feet of residential amenities.
Citi Community Capital is providing a $160 million construction loan funded with $23 million of tax-exempt notes issued through the Washington, D.C. Housing Finance Agency (DCHFA) and a $137 million taxable construction loan. In addition, Citi arranged a $160 million forward commitment for permanent financing from Freddie Mac in its role as an Optigo lender. Goldman Sachs, in addition to its land loan financing and equity participation, will be the purchaser of approximately $15.7 million of low-income tax credits generated as-of-right. The financing was secured by Toll Brothers and L+M Development Partners. Toll Brothers Apartment Living and L+M will oversee the development, management, and marketing of the project.
The property, bounded by First Place, M, First and L Streets, NW, was acquired from the Sursum Corda Cooperative in 2018. As part of the agreement, members of the Sursum Corda Cooperative will have the right to return to up to 127 units included in the development. Phase 1 of the development won unanimous approval from the Zoning Commission last year and will be built on the southern portion of the site. While Phase 1’s tax exempt bond and low-income credits support 118 units that will be restricted at various incomes at or below 80% of Area Median Income, the aggregate development will be constructed in multiple phases, which will include up to 1,100 apartments of which 199 will be affordable when fully completed.
Phase 1’s two buildings will offer a mix of studio, one-, two-, three-, and four- bedroom floorplans. The southwest building in Phase 1 will be comprised of 216 apartment homes and feature health and wellness-centered amenities for the community, including a cardio and weightlifting gym, a yoga and cycling rooms, an outdoor yoga deck, locker rooms, and pet spa. There will also be a children’s playroom, a co-working lounge and a pool on the second floor with cabanas and seating overlooking the community park.
The southeast building will include 345 apartment homes and feature community-driven amenities, including a coffee bar, a large co-working space, maker space, game room, full-service kitchen and dining room, a greenhouse equipped with gardening stations and indoor greenery, and a rooftop deck with indoor-outdoor space.
Mount Airy in Action, an affiliate of neighboring Mount Airy Baptist Church, will participate in the joint venture in addition to being a co-applicant in the Planned Unit Development. Mount Airy is one of the area’s most enduring institutions and will help promote the development’s affordable housing.
Fred Cooper, Toll Brothers’ Senior Vice President of Finance and Investor Relations, stated: “We are thrilled to secure this financing, which will enable us to execute on a highly anticipated redevelopment plan that will create new housing, including a significant amount of much-needed affordable housing. We have assembled a very strong team. We’ve enjoyed working with L+M, Citi and Freddie Mac in the past, and are excited to also partner with Goldman Sachs’ Urban Investment Group, Mount Airy Baptist Church, City leaders, and the Washington, D.C. Housing Finance Agency on this transformational project.”
Charles Elliott, President of Toll Brothers Apartment Living, said, “Toll Brothers Apartment Living has developed over 2,300 units in the region and over 1,100 in the District. As we continue to grow our pipeline in this vibrant market, we are committed to bringing the same elevated customer experience and quality we are known for throughout the country to each of our communities.”
Ron Moelis, CEO and Founding Partner of L+M Development Partners, said, “We're proud to expand our work to Washington, D.C. to help revitalize this area of the city through mixed-income housing and a community park. It is particularly meaningful for us to provide high-quality affordable apartments to members of the Sursum Corda Cooperative, and we look forward to welcoming them and their neighbors to their new homes in 2022. Thanks to the D.C. Housing Finance Agency and all of our partners for helping us reach this major milestone in the area's redevelopment.”
Margaret Anadu, Goldman Sachs Managing Director and Head of the Urban Investment Group, said, “Reactivating this site and creating much needed mixed-income housing, especially for previous Sursum Corda residents, is an example of the progress that is possible when leaders from the community, the public sector, and private sector work towards a common goal. The mixed-income housing, new park, more pedestrian-friendly streets, and infrastructure improvements will collectively provide a slightly wider path to more opportunity and socioeconomic mobility for local residents.”
Rev. L. B. West, D.R.S., of Mount Airy Baptist Church, said, “For 127 years, the Mount Airy Baptist Church has represented a pillar of strength as an institution of moral quality for the residents of the Northwest One and surrounding communities. It has been a real joy assisting all the constituent entities, and now, for one of our affiliates, Mount Airy in Action 2020, to be involved in the further redevelopment of this wonderful community is rich beyond compare. MAIA2020 is a non-profit 501-c-3 organization responsible solely for affordable housing. It is with grateful hearts that we express our delight in joining the Toll Brothers/L+M partnership in developing affordable housing for future Northwest One constituents.”
Melissa Lockett, Citi Community Capital Vice President, said, “Citi has been providing financial services on the ground in Washington, DC since the early 1900s. The closing of Sursum Corda marks the continuation of Citi’s commitment to revitalizing our nation’s capital and funding high quality, much needed housing that will greatly benefit the community.”
Christopher E. Donald, Interim Executive Director, of Washington D.C. Housing Finance Agency, said, “DCHFA’s investment in the redevelopment of Sursum Corda reflects the agency’s mission and the Bowser administration’s mandate to provide affordable housing across all eight wards of the District, including the thriving neighborhood where this development will be located. This is evidenced by the right for former residents to return and the reservation of affordable units within the development.”
Peter Lillestolen, director & co-head for Targeted Affordable Housing Retail at Freddie Mac, said, “As a result of this effort, more than 100 District residents will have an affordable place to call home. Freddie Mac is proud to provide financial certainty to this unique redevelopment through a $160 million forward commitment.”
Construction has commenced on Phase 1, which is estimated to welcome its first residents in 2022. Please visit TollBrothersApartmentLiving.com for future updates and information regarding the community.