GRANDVILLE — The Grand Castle LLC has secured a $48.3 million bridge loan from Maryland-based real estate finance firm Walker & Dunlop Inc.
The firm provides short-term, nonrecourse loans backed by multifamily properties that are being repositioned or that do not yet qualify for permanent financing. The 522-unit castle-themed apartment building along I-196 southwest of downtown Grand Rapids opened for tenants in 2018.
The 24-month, floating-rate loan includes full-term interest-only payments and enables the owner of the Grand Castle to pay off its existing construction debt with time to lease the remaining units at the property, according to a statement.
Currently, Grand Castle Apartments is 70-percent occupied, said Troy Zapolski, former vice president at Land & Co., which manages the property, and a consultant for the Grand Castle.
The loan, which was announced this month, was issued on June 12, and paid off the castle’s construction lender, U.S. Bank, Zapolski told MiBiz. The company needed to secure the funding because the project expanded from 400 to 522 units before it was built.
“When we increased it to 522, we knew it was going to take a little longer, so we found an additional funding source that would give us additional time to stabilize and maximize loan dollars, and move into the secondary market,” Zapolski said.
Previously, Grand Castle’s developer told MiBiz that the project’s cost was more than $50 million, but declined to be more specific.
The absorption of the project has been “tremendous,” Zapolski said. There are about 370 residents in the Grand Castle, which opened for tenants in November 2018.
Future build-out for the castle could include roughly 100 more units in carriage-style apartments surrounding the development, although those plans are in early stages. For now, Land & Co. has focused on leasing the remaining units and finishing construction, Zapolski said.