The Riverwards Group has secured $35.8 million in construction financing for the development of a multifamily project in Philadelphia. This marks the next phase of their planned residential complex. Silver Heights Capital provided a $19.9 million senior construction loan, while Nuveen Green Capital contributed $15.9 million through Commercial Property Assessed Clean Energy (C-PACE) for the 170-unit Somerset Phase II project in Philadelphia's Port Richmond district.
Seth Greenwald, Managing Partner at Silver Heights Capital, stated that this financing demonstrates the benefits of combining senior debt with C-PACE financing. He emphasised that the long-standing relationship with Nuveen Green Capital and shared experience in closing multiple transactions led to an optimised capital structure, lower overall cost of capital, and greater execution certainty for the sponsor.
Project Overview and Financing Structure
The 146,158 square foot (approx. 13,578 square metres) project is part of the multi-phase master-planned community Somerset Station, located near the Delaware River. Somerset Phase II is situated on the same site as the already completed first phase of the master plan, which comprised 220 units. This phase was sold by the Riverwards Group to the Philadelphia Housing Authority for $58.1 million in May 2025.
D2 Capital Advisors, represented by a team including Jack Cortese and David Frankel, arranged the non-recourse transaction. According to D2, the deal was structured with layered senior debt combined with C-PACE financing to maximise loan proceeds and reduce the borrower's overall cost of capital. Cortese noted that Silver Heights and Nuveen signed up to a team and a product that had already proven itself. He added that a tapering supply pipeline before an early 2028 delivery allowed for assembling a $35.8 million capital structure that aligns with the business plan and positions Riverwards well for the next steps at Somerset Station.
Market Conditions and Project Features
Cortese highlighted that there is strong demand in Philadelphia's multifamily sector. The city issued the fewest residential building permits in 2024 for eleven years, leading to a smaller supply pipeline before the planned completion of Somerset Phase II in 2028. Mike Doty, Senior Director of Originations at Nuveen Green Capital, explained that the transaction underscores how C-PACE serves as a flexible and cost-effective financing platform, bridging the gap between senior debt and equity.
The project, located at 2202 East Somerset Street, four miles north-east of downtown Philadelphia, will offer a mix of 76 studios, 38 one-bedroom units, and 56 two-bedroom units, along with on-site garage parking. According to Cortese, the development benefits from an existing 10-year, 100% real estate tax abatement. The Riverwards Group is also providing $10 million in equity for the construction project, which will be executed by its general contractor, Urban Renewal Builders. The company has already completed other multifamily projects in Philadelphia, such as Kensington Courts, Avenue V, N5 Square, and The Lenora.
Mo Rushdy, Principal of the Riverwards Group, emphasised that extensive groundwork on the property was completed during Phase I. This made Phase II ready to commence vertical construction quickly. He stated that it was crucial to appropriately recognise the value of this preparatory work and the permits for Phase II.
