Apartment Finance Today

Parting Shots

On Tap Affordability

APARTMENT FINANCE TODAY • May/June 2009

A historical reuse of the Pabst Brewery in Milwaukee marks a Wisconsin developer’s second brewery-to-apartments deal in the past two years.

BY Chris Wood

GORMAN & CO. AREN’T JUST beer guys. Sure, the Oregon, Wisc.-based affordable and adaptive reuse developer is about to finish leasing up the Blue Ribbon Lofts, a 95-unit redevelopment of the Pabst Brewery keg house, a vacant Milwaukee eye sore since it was sold to investors in 1996. Gorman, likewise, transformed the Gund Brewery in Madison, Wisc., into 85 units of workforce housing. And, company president Gary Gorman says there is an “unofficial mandatory” beer consumption policy at 4 p.m. on Friday at Gorman corporate headquarters.

Still, there’s more to Gorman than hammering studs and suds—the company’s portfolio also includes the redevelopment of high schools, a wagon factory, and a toy factory. “We don’t claim any specific specialty with breweries,” Gorman says. “Our development talents lead us to buildings that are not being renovated by straight market-rate folks. The projects are driven by relationships and almost always take a combination of unconventional financing to make them work.”

At the Pabst site, Gorman was approached by lead developer and past joint venture partner Joseph Zilber to identify and execute the multifamily component of a $205 million redevelopment that will ultimately include commercial space; university classrooms; and (what else?) a Hofb rauhaus brew pub. The 100,000-square-foot building was tapped for residential living due to its historic significance and suitability for loftstyle apartments. Blue Ribbon Lofts features artists’ workspace and galleries; a music studio; business center; theater; and fitness center to complement 69 income-qualified and 26 market-rate apartments.

Financing for Gorman’s $16.2 million chunk of the project was supported by federal and state historic tax credits and $9.1 million in federal low-income housing tax credits allocated by the Wisconsin Housing and Economic Development Authority. Additional equity financing was provided by Great Lakes Capital and City Real Estate Investors. There was no debt component to the deal.

Gorman & Co. have an option to purchase additional buildings at the Pabst site for redevelopment, but the firm is waiting to complete lease-up at Blue Ribbon Lofts and take stock of the economy. The entire project is slated for completion in 2012.

Since January, 41 of the 95 apartments have been rented. Affordable units, targeting residents earning up to 60 percent of the area median income, range from $545 to $795 a month, while market-rate rents run from $900 to $1,200. The units feature distinct designs such as corrugated steel warehouse doors that open into common area hallways. “That’s the fun part about this business,” Gorman says of the design. “As affordable and historical developers, we are able to do unconventional things with unconventional buildings.”

Also unconventional? A photo Gorman took prior to lease-up. His father-in-law, who coincidentally was Pabst’s CEO prior to its sale, asked Gorman not to touch his old office. “I [found] the office and took a photograph with my feet up on a desk as I cracked open an ice cold beer,” Gorman says. “He was plenty irritated, but I think he’ll get over it.”