Real estate investment firm Stoneweg, which specializes in multifamily acquisitions and developments, has closed a $50 million construction loan for its first ground-up development in St. Petersburg.
First Horizon Bank, which has a long-standing relationship with Stoneweg US, provided the loan for the Lake Maggiore Apartments, a 330-unit, mixed-income apartment development for 6th Street South.
Stoneweg purchased the property last year for $6.4 million. A decade ago, the vacant 14-acre property was the site of a mobile home park.
The construction loan closed Sept. 15, according to public records, while the news of the loan was announced Tuesday.
First Horizon Bank has also financed the construction of Tuscan Reserve Apartments, Stoneweg’s inaugural development in Palm Coast. The bank will serve as the lender on this milestone project. PGIM Real Estate, the $206.8 billion real estate investment and financing business of global asset manager PGIM, will serve as the equity partner on the transaction through a preferred equity investment made on behalf of its high-yield strategy, according to Stoneweg’s announcement.
“Lake Maggiore Apartments benefits from its proximity to Downtown St. Petersburg, a walkable urban destination that includes a diversified employment base and retail amenities, and will provide necessary additional housing to South St. Petersburg,” Daniel Kattan, executive director at PGIM Real Estate who led the transaction on the firm’s behalf, said in a statement.
Out of the 330 units, 66 units, or 20%, will be allocated to workforce housing. Initially, Stoneweg planned to have 100 workforce units, but as the deal went through various iterations and the developer engaged with the city, the workforce units have reduced to 66 units, according to a spokesperson. The reduction of units will allow the project to become financially feasible.
“Incorporating a workforce housing component to the communities we develop is a vital part of the underwriting process of all our developments,” said Mark Rios, director of development for Stoneweg US. “While initial projections appeared conducive to allocating a larger number of workforce units at Lake Maggiore, those initial projections weren’t sustainable given the volatility of the market, supply chain challenges, and increased construction costs we’ve seen over the last two years since embarking on this project. While 20% is less than we initially hoped for, it still allows us to affect the renter’s class hit hardest by increased rents and limited solutions and deliver what we are most passionate about which is workforce housing.”
NDC Construction is the general contractor. The construction is expected to be completed by the second quarter of 2024.
It will offer amenities including energy-star appliances, electric charging stations and community gardens and event spaces.
Stoneweg is the same group vying to redevelop the controversial Coquina Key Shopping Plaza, and also recently purchased the 15-story WaterView Echelon City Center apartments in a $100 million deal.