Article courtesy of the Milwaukee Business Journal
It’s testament to both the size of the development and current real estate lending environment that Mandel Group Inc. needed loans from three banks to launch construction of 237 apartments at the former School Sisters of Notre Dame campus in Elm Grove.
That project will renovate two historic Sisters of Notre Dame buildings, and construct three new apartment buildings from the ground up. Mandel Group acquired 15 acres on Watertown Plank Road for the development from the Sisters of Notre Dame organization as it closed financing at the end of August, said Phillip Aiello, president and chief operating officer of Mandel Group.
Apartments in two new buildings and two restored structures are expected to be ready for residents by the end of 2024, Aiello said. A third apartment building will open in the third quarter of 2025. Separate from Mandel’s apartments, Miller Marriott Construction Co. of Hartland is to build 21 single-family homes on another portion of the former Sisters of Notre Dame property.
Due to the size of the project and the current limits banks are placing on real estate loans, Mandel Group had to borrow from three different lenders. Banks have tighter limits on loan amounts than in years past.
“The size and cost of this development – which then precipitates a larger loan – and a tightening of the underwriting standards, combined to make it a three-bank deal,” Aiello said. “Generally speaking, we have not had to do that in the past.”
Old National Bank and Johnson Bank are the primary lenders to the Elm Grove project, and First Business Bank also lent money.
“Given the change in economic conditions, many lenders are focusing on their existing, highly valued relationships, and we’re fortunate to have a number of those locally,” Aiello said.
Ixonia Bank also participated in the financing with a letter of credit that will bridge the time period between when construction is completed, and a portion of the tax incremental financing from the village is released.
The development also will receive tax incremental financing that village of Elm Grove officials approved last year. The village support, combined with rising market rents for apartments, helped the project move forward and pay for its underground parking even though construction costs and interest rates are up, Aiello said.
The project’s rents will start at $2,000 a month, rising to more than $3,500 for some of its three-bedroom apartments, Aiello said. It will have one- to three-bedroom units.
Mandel Group will restore two historic Sisters of St. Francis buildings near Watertown Plank Road to create 35 apartments and amenity spaces. That includes converting a former chapel area that was most recently the sisters’ heritage room into a distinctive, two-story club room. Cabinets in the buildings will be converted into built-ins for some apartments’ dining areas, and the interior brick walls will remain exposed, Aiello said.
Engberg Anderson Architects of Milwaukee is the designer. Catalyst Construction of Milwaukee is the lead builder.
Lead and asbestos abatement has already begun in the two buildings that will be restored, and others that will be demolished this year. Mandel Group this year will begin installing new water main pipes to serve the site.
At 28 acres, including a cemetery that will be untouched in the redevelopment, the Sisters of Notre Dame site is an unusually large redevelopment prospect for Elm Grove. The sisters have been involved in the property since the creation of the Notre Dame of Elm Grove convent and orphanage in 1855, according to comments provided Friday.
The Sisters selected Mandel Group in 2020 as its preferred buyer for the site. Aiello said that, prior to the closing, he reviewed some emails dating back to 2017 between the Sisters organization and Mandel Group over the possibilities for the site.
Beyond gaining local approvals for the project plan, which faced opposition from a group of Elm Grove residents, the project also required new water service agreements with the city of Wauwatosa to serve the site.
“The School Sisters have been fantastic partners,” Aiello said of their patience as the project came together. “They understood the process was a longer one in Elm Grove, and they also understood that the process got drawn out when construction costs and interest rates started to escalate so quickly, and we had to regroup.”
The sisters living in the convent in fall 2021 moved into a newly built community on the campus of Mount Mary University called Trinity Woods. The organization’s offices moved to Wauwatosa in 2021.
“Proceeds from the sale of the (Elm Grove) property will be used to support the ongoing mission and ministries of the SSND and the retirement needs of the sisters,” according to a written statement attributed to Sister Debra Marie Sciano, provincial leader of the School Sisters of Notre Dame Central Pacific Province.
