James P. Kelleher
James P. Kelleher
Title: Chief Investment Officer, New Boston Fund
Age: 55
Experience: 30 years
As chief investment officer at the New Boston Fund, Jim Kelleher played a key role securing financing for the One Greenway development. The site was recaptured after the Big Dig and New Boston, along with the Asian Community Development Corp. (ACDC), planned a development for the site, but it was shelved during the Great Recession. When the economy turned the corner, the team revisited the project and the building went up six years later. Recently, Kelleher sat down with Banker & Tradesman to discuss the complexities of financing One Greenway – while taking in the view from one of its model units.
Q: Can you give the readers of B&T a brief overview of this development, from the time you took it off the back burner after the downturn?
A: Probably in 2010, 2011, we started working on it. In 2012, we renegotiated our deal, our ground lease arrangement with the Department of Transportation. We went back and redesigned the building into two separate structures, which is 217 units of market-rate housing, and 95 units of affordable housing in this building, which we call the North Building. From the outside it kind of looks like two buildings because there’s a 10-story component and a 21-story component, but it’s really one building.
Q: What was your biggest challenge in putting together financing for this project?
A: The biggest challenge was the number of people we had to have involved to make this work. It really was planned over a six-year period plus two years of construction, so really it was an eight-year project. There were really two equity investors – we were the majority equity investor – and we had a 20 percent equity investor who we wound up not involving in the project. We went out and brought in a second equity investor, a passive equity investor who’s a 20 percent participant in the deal right now. We have ACDC, who didn’t invest equity, but they’re certainly very active in the project and an important stakeholder.
We have many state and city entities who helped fund the affordable component. There are 11 of those. And then we had five banks. So to do this, we had to basically bring together five different banks and 11 different agencies of state and city governments and two equity investors and the neighborhoods and get the approval of the BRA and everybody else. So the biggest challenge was getting them to line up on a single deal structure at the same time.
Critical to putting the deal together and closing were Tim Medlock and Eric van Dusen, who’s in our finance group. There was a team of people at New Boston, including Tim and Eric, as well as numerous other people who participated in the execution of the project.
Q: How did the financing work for this deal?
A: This is one building, but it’s really set up as two condominiums. One of them is the market-rate component, which is the 217 units, plus the parking garage, which is set up as a separate company, and the second condominium is the affordable component. The project basically broke down that two-thirds of the overall project costs were associated with the market rate component and – these are real rough numbers – about a third was associated with the affordable component. The affordable component was financed through a combination of Low Income Tax Credits and various grants and loans from city and state entities, but the biggest component there was the tax credits. The participating stakeholders – the vast majority were on that side.
In addition to the state agencies, we had these commitments for state and federal tax credits, so we had tax credit investors who would ultimately buy those, and we had a construction lender on that side and we had a takeout lender on that side. A lot of the complexity was a direct result of the affordable component and the complicated structure it took to make that happen.
On the market-rate side, that was more of a traditional investment structure. Our private equity fund invested 80 percent of the money, we had a second investor invest about 20 percent of the money and the rest of it was a construction loan.
Q: What percentage occupancy do you have now?
A: The affordable component was leased under a lottery and it was 100 percent full within 30 days. We held a lottery, it filled immediately, and it took 30 days to move them all in. There’s a ton of need for affordable housing. That was instantaneous.
The market rate has taken a little bit longer, we’re just over 90 percent. I believe we’re 92 percent leased today, so we’re pretty stable. We’re almost stabilized.
In this building we’ve gotten a significant number of Millennials and young professionals, but because of our location, we’ve also gotten empty-nesters, doctors from Tufts Hospital, medical students from Tufts Medical Center and dental school. We’ve really gotten a little bit broader range of tenants because of our location.
Kelleher’s Five Favorite Family Vacation Spots:
- The Dalmatian Islands in Croatia
- British Columbia in Vancouver
- Skiing in the Rockies
- The Amalfi Coast in Italy
- Chatham, Massachusetts
