The Daily Record: $75M Mixed-Use Fitzgerald Development Moves Forward
September 30, 2008
One of midtown Baltimore’s high-profile residential projects is moving forward, as developers have secured financing for the $75 million Fitzgerald at UB Midtown apartment complex despite an icy credit market.
The Greenbelt-based Bozzuto Group announced Tuesday that it has begun construction on the Fitzgerald, a 280-unit apartment complex that will be built on land leased from the University of Baltimore. The project is scheduled for completion in 2010, but will also include a 1,245-space parking garage that is expected to open in late 2009.
“It’s just a pretty wonderful thing,” Toby Bozzuto, executive vice president for the developer, said of his company’s ability to find financing for the project. The money comes as a mix of debt and equity. Bank of America Corp. and a subsidiary of the Royal Bank of Scotland Group Plc are making a $52 million construction loan, according to Bozzuto; along with equity investors led by the New York State Teachers’ Retirement System who are contributing $23 million.
The project is a joint venture among Bozzuto, Gould Property Co., the retirement system and former Baltimore Raven Michael McCrary. It is named after famed author F. Scott Fitzgerald, who once lived in nearby Bolton Hill. The Fitzgerald will be managed by Bozzuto.
Bozzuto credits an existing relationship with the lenders and investors in getting the project moving, and said the market for residential rental is still relatively strong, especially in midtown, where the project can attract students as well as urban-dwelling professionals.
Steve Cassard, vice president for facilities management and capital planning at the University of Baltimore, said the timing of the financing announcement was “remarkable,” though Bozzuto had been negotiating with lenders for several months.
“It’s a testament to their strength and quality that they were able to close during one of the worst weeks in the U.S. financial markets,” he said.
Cassard said he has high hopes for ground level retail at the site, which he said could help draw a better connection between the Bolton Hill neighborhood and the Mount Royal Avenue area.
Bozzuto also owns Harbor East’s Spinnaker Bay apartments and manages several other projects in Baltimore. The company began working on the project in response to a request for proposals issued by UB in 2005 to develop Bolton Yards, a 580-space parking lot at the corner of Mount Royal Avenue and West Oliver Street.
The developer has since brokered a complicated tax deal with the city. Bozzuto will sign a 65-year ground lease on Bolton Yards, but the state-owned land will be subject to Baltimore City taxes once it is developed. Under a deal that amounted to about $12 million in tax breaks, Bozzuto agreed to pay the city what UB estimates to be about $200 million over the life of the lease.
Toby Bozzuto said the ground lease and public involvement made the deal more complicated to finance, if anything, because of all the players involved. But he said Baltimore and the school were helpful in putting the plan together and getting it financed.
Babu Baradwaj, associate professor of finance at Towson University, said one of the factors that made the financing work might have been the fact that the parking garage will come online sooner than the rest of the project, which makes cash flow smoother.
He added that the urban neighborhood has a different dynamic than that in the suburbs, where housing inventory is sitting for a longer period of time.