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NEEDHAM, MA-Needham, MA-based Potomac Realty Capital LLC is closing on a $20-million bridge loan to acquire and renovate a portfolio of seven military housing communities. The class B buildings will be renovated and converted into 1,000 multifamily units.

The seven buildings were previously built in conjunction with the military, which then held the property under an 801C, which is a program where the US military holds a master lease on all the apartment buildings around a military base–in this case Fort Drum. The property taxes are deferred for 20 years when the 801C expires, after which the space reverts back to the original builders.

Dan Palmier, president and ceo of Potomac, tells GlobeSt.com that the bridge loan will mostly be used to pay off the deferred taxes on the property, which amount close to $10 million. Potomac will pay closing costs around $1 million and the estimated renovations are $2 million, which will leave $7 million to pay the return of equity to the original builders in a cash-out settlement.

Although no specific prices were disclosed, Palmier says the units are “available currently” as “market rate rental properties” for both civilian tenants, as well as military personnel. Fort Drum is the home of the 10th Army Mountain Division, located in upstate New York.

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