Mather secures funding for $ 500 million skyscraper, overcoming challenges of pandemic

Mather, a nonprofit organization for the elderly, is set to launch its retirement home project near Washington, DC, thanks to recently announced funding.

Through syndication led by The Huntington National Bank, Mather secured $ 300 million in funding for the construction of The Mather, his future life plan community in Tysons, Virginia. Mather, based in Evanston, Ill., Also operates senior residences in the Greater Chicago Market and Tucson, Arizona.

Tysons’ $ 500 million development is a 50-50 partnership between Mather and Illinois-based real estate investment manager Westminster Capital. The project is also funded by equity from Mather and Westminster and a 10-year taxable green bond issue through the Mather Foundation, which is lending $ 70 million to the project.

Architectural rendering of The Mather, subject to change; courtesy of Mather

The proposed lenders and bond investors have also expressed interest in the project, according to Mather CEO Mary Leary. In fact, the project’s construction loan and taxable bonds were oversubscribed, meaning the project’s lender group offered more money than Mather asked for. This is notable given that the pandemic and its challenges froze many sources of capital in 2020.

“At the end of the day, this is a very exciting and successful fundraising, which hopefully bodes well for other providers,” Leary told Senior Housing News.

But securing the funding was not easy, she added. The project started to materialize in 2017, but it wasn’t until early 2020 – just before the Covid-19 pandemic – that Mather put out a tender for its funding.

“The timing couldn’t have been more difficult,” Leary said. “Many banks were left on the sidelines during the first days of the pandemic. “

Faced with funding challenges, Mather and Westminster considered single-source, non-recourse funding options, but none came to fruition given the size and scope of the project. Mather therefore returned to some of the construction lenders he had established relationships with in the past and ended up attracting significant interest from Huntington and other capital providers.

“As we shared our story, we ended up being very successful and attracted a significant number of national and regional banks to participate in a syndicated loan,” Leary said.

What caught the attention of lenders was the number of households in the DC area by age and income, and the fact that Mather had strong presales for the community with 84% of the first phase. already booked, according to Leary.

By the end of September, Mather had closed his $ 300 million construction loan. Overall, the process took about a year longer than Mather initially expected, according to Leary. The cost of the project also increased by around $ 20 million due to the delay.

Mather met many lenders who were averse to risk and wanted providers to have more skin in the game, so to speak. That’s why Mather ultimately pursued a taxable bond issue – his very first, according to Leary. It should also be noted that the bond issuance is designated as “green” due to the LEED Gold pre-certification of the Mather project.

“In the past, we’ve always looked for short-term construction loans that are paid off by first-generation entry fees,” Leary said. “We received an A + bond rating from Standard and Poor’s, which is a very positive rating. “

Looking ahead, Leary believes The Mather is well positioned to see the demand for older people in and around the region. And she is delighted that the association is establishing itself in a region that is becoming more and more competitive over time.

“It’s a deep market and over the past few years it has been underserved,” Leary said. “We believe that we are in a unique position. “

As designed, the project will include two residential towers – one with 186 apartments and another with 114 – built in two phases of construction.

Units should come with features like hardwood floors, quartz cascading countertops, and digital shower controls.

The two buildings are expected to be connected between their third and fifth floors, and the project also includes amenities such as a fitness center, spa, indoor pool, several restaurants, outdoor terraces, an art studio, retail space on the ground floor and a community center for people aged 50 and over.

The price of the entrance fee ranges from $ 650,000 to approximately $ 4.4 million, with 90% of this total being reimbursable to a resident or their estate. If a resident brings their spouse, an additional entrance fee of $ 66,000 is charged. Monthly charges for residents start at around $ 3,500 for a Type B health service plan and $ 4,750 for a life care plan.

With all of his finance in place and Whiting-Turner Contracting Company as the general contractor, Mather plans to begin vertical construction of the first phase of the project in the first quarter of 2022. Construction of the second phase will likely begin around a year later. , with opening dates expected in the first quarter of 2024 for the first phase and potentially later that year for the second.

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