Riverside Investment and Development Secures $64M HUD Construction Loan for 199-Unit West Loop Apartment Tower

Riverside Investment and Development has secured a $64 million construction loan to finance a 12-story, 199-unit apartment tower in Chicago's West Loop, reviving a project that had been suspended amid elevated construction costs and constrained financing conditions.

The Chicago-based firm obtained the loan through the U.S. Department of Housing and Urban Development's 221(d)(4) program, a fixed-rate financing vehicle for rental housing developers. The total development cost for the project at 566 W. Van Buren St. is approximately $85 million, with the remainder funded by equity from Riverside's partners, Blue Star Properties and Metropolis Investment Holdings, a German family office. Real estate services firm Draper and Kramer arranged the HUD financing on behalf of Riverside.

Reviving a Paused Development

Riverside first unveiled plans for the project in 2022, but like many developers in recent years, the firm encountered headwinds from inflation-driven construction cost increases and interest rate uncertainty that forced a pause.

"This is a deal that we've been working on for a number of years," said Mike Potter, Executive Vice President at Riverside Investment and Development. "Capital markets today are very constrained. That's why there's very few cranes and active projects that are out there. As a team, we pursued a number of different avenues to get this started. . . . To get things done these days, it requires a lot of creativity."

Riverside Vice President Stefani Kalter said it was "really attractive to get to lock in interest rate certainty" with the HUD 221(d)(4) financing. Loans through that program are fixed-rate, with interest rates ranging from 5.6% to 6.1%, and are fully amortizing over 40 years.

Project Details and Financing Structure

The 12-story building at 566 W. Van Buren St. will contain 199 residential units. The project is being built as of right, meaning it did not require zoning approval from the Chicago City Council and is not subject to the city's Affordable Requirements Ordinance, which mandates that 20% of units in many new development projects be marketed at affordable rates.

"Just from an execution standpoint in today's market, the size is part of what helped us get it started," Potter said.

Rents at the building are expected to land at approximately $4.25 per square foot, which Potter described as a slight discount from pricing at other nearby luxury buildings. The project is targeted for completion in early 2027.

Chicago's Constrained Multifamily Pipeline

The financing comes amid a muted development pipeline in Chicago, where challenges in the debt and equity markets have limited large-scale project starts in recent years. According to data from Integra Realty Resources, approximately 800 apartment units across four complexes are on track for completion in 2026, with about 2,100 units anticipated in 2027.

Supply constraints have contributed to rising rents across the market. The net monthly rent at top-tier apartment buildings in downtown Chicago was up approximately 8.6% year over year in the fourth quarter, according to Integra.

Riverside's Expanding Residential Portfolio

Riverside Investment and Development is best known locally as the developer of the BMO Tower and other downtown office skyscrapers. The West Van Buren Street project and a city-subsidized office-to-apartments conversion at 135 S. LaSalle St. mark the firm's first residential projects in the city proper. Riverside previously built The Main, a nine-story apartment complex in downtown Evanston, in 2016.