Worcester real estate development company North Village Lofts will purchase and renovate the former Indian Hill Schoolhouse with a $2.78 million loan from MassDevelopment and Main Street Bank.

The property at 155 Ararat St. in Worcester will be converted into 23 market-rate rental housing units. Marlborough-based Main Street Bank was the lead lender on the financing; MassDevelopment contributed slightly less than $1.4 million to the loan.

“As a community lender, it is gratifying to be a part of the revitalization of a historic building and a partner with MassDevelopment on this project,” Rick Bennett, CEO of Main Street Bank, said in a statement. “The developers have such a great vision for the property and we’re excited to see this come to fruition.”

North Village Lofts is a partnership between Worcester developers Timothy Adler and Daniel Stroe. The Indian Hill Schoolhouse project is the team’s first real estate venture together. The property was built in 1925 as a public elementary schoolhouse, but the city of Worcester declared it a surplus property in 1981. The city then sold the building to The Salter School, a private secretarial school that occupied the facility until 2006. The building has since been vacant.

“MassDevelopment is proud to partner with lead lender Main Street Bank on this financing, which will help North Village Lofts LLC restore a vacant building to active use and preserve a historic Worcester property,” MassDevelopment President and CEO Lauren Liss said in a statement. “We are pleased this project will add high-quality, market-rate housing in Worcester.”

In addition to re-activating an underused property in Worcester, the developers plan to preserve the Indian Hill Schoolhouse building’s brick, wood beam and stucco gothic exterior and many interior architectural elements.

Occupancy is expected in early 2019.