Related California and Deutsche Bank today announced they’ve closed on California’s largest-ever construction financing with tax-exempt bonds, totaling $316.8 million, to finance construction costs for its new development at 1500 Mission Street. The tax-exempt bonds will be purchased by Deutsche Bank (NYSE: DB), as will the balance of the financing, $141.7 million of variable rate demand notes. Closing construction financing is critical to ensuring progress continues and the timeline stays on track. The size of the investment underscores not only the unprecedented scope and complexity of the development, but Related’s prominent presence in San Francisco. Between 1500 Mission Street, Transbay Block 8, and 1601 Mariposa, Related California has more than $1.5 billion of assets under construction and another $1 billion in development in Northern California. Additionally, Related has seven affordable housing developments in pre-development in the region, totaling more than 1,000 units.

1500 Mission Street, designed by renown Skidmore, Owings and Merrill (SOM) Architects, will include two buildings; a 550-unit mixed-income, mixed-use residence with a 31,000 square foot Equinox Fitness Facility, and a 460,000-square foot office building which will be owned by the City and County of San Francisco. 1500 Mission was entitled in partnership with the San Francisco Department of Real Estate. The office building will be a “one stop shop” permitting center, which is expected to serve thousands of San Franciscans each year, and will be the future home for the Planning Department, Department of Building Inspection, and the Department of Public Works.

Gino Canori, Executive Vice President and Head of Development of Related California discussed the deal saying “This transaction represents the final milestone for 1500 Mission Street, which will create 550 apartment homes in this emerging neighborhood, and is indicative of our larger commitment to leveraging public-private partnerships throughout San Francisco to deliver critical mixed-income developments.” Canori added, “Leveraging tax-exempt bonds at this scale as the financing solution positioned Related to deliver a best-in-class development, 20% of which will be below-market-rate, and a modern, efficient office building the City and County of San Francisco is able to purchase at a far lower cost than would have been realistic had it pursued its own ground up construction, making 1500 Mission Street a clear win for all involved.”

Matthew Witte, Related California Project Executive, shared excitement for the future saying, 1500 Mission’s compelling transit-oriented location, unparalleled amenities, celebrated design are already creating excitement among nearby residents eager to see benefits of a new neighborhood, and city staff who will have a new home for generations.” Added Witte, “1500 Mission Street came to exist thanks to the vision and leadership of the late Mayor Lee. He was determined to provide San Francisco with more homes and better, more responsive government and forging partnerships like this was a hallmark of his administration. We also wouldn’t be at this milestone without Supervisor Kim, the San Francisco Department of Real Estate, and the flexibility and innovation of Goodwill of San Francisco, San Mateo, and Marin, and our financial partners at Deutsche Bank.”

John Gleber, Managing Director at Deutsche Bank said, “Deutsche Bank has a history of financing transformative projects that enhance the communities in which they’re built, and 1500 Mission Street is a perfect example of that.” Gleber continued, “Deutsche Bank values innovative and dynamic partners, and 1500 Mission Street is the twelfth Related development for which we’ve provided funding. We look forward to working together again in the future.”

Related purchased the building from Goodwill Industries, Inc. for $65 million in 2014, providing the hundred-plus year-old non-profit with critical liquidity while the organization relocated to Bay Street in North Beach. Goodwill recently purchased a permanent home in the Tenderloin to be closer to the populations it most frequently serves. Demolition began at the site in November, 2017 and the City and County of San Francisco and Related California are expected to celebrate a formal groundbreaking at 1500 Mission Street in early 2018. Construction is expected to last 28 months, with the grand opening expected in May, 2020.