MassDevelopment and The Washington Trust Company have closed a major financing package to support what is described as the largest office-to-residential conversion undertaken to date in Massachusetts. The capital stack will back the transformation of the former Fallon Community Health Plan headquarters at 10 Chestnut St. in Worcester into a new multifamily community.
The borrower, OCP Worcester Owner LLC, an affiliate of real estate development company and property owner Synergy, has secured a total of $51,170,000 in loan financing for the project. Synergy plans to redevelop and convert the office building into 198 new market-rate apartments, repositioning a legacy corporate address into housing in Worcester’s downtown core.
As the primary lender, The Washington Trust Company has provided $47.57 million in loan financing to the Synergy affiliate. MassDevelopment has complemented that commitment with a $3.6 million Housing Development Incentive Program (HDIP) tax credit bridge loan, designed to advance funds against anticipated state tax credit proceeds and help move the conversion forward.
The capital stack also includes significant state-level incentives. The Executive Office of Housing and Livable Communities has awarded a $4 million HDIP allocation to the project, as well as a separate $3.6 million Commercial Conversion Tax Credit award. These awards are intended to support the repositioning of commercial space into residential use and to encourage additional housing creation in established urban cores.
Local government support is another component of the financing structure. The City of Worcester is backing the project through a 15-year Tax Increment Exemption, providing a long-term property tax incentive aimed at improving project feasibility and supporting reinvestment in the city’s downtown area. Together, the tax credit awards and local tax relief supplement the senior loan and bridge financing to create a multi-layered capital solution for the conversion.
State officials framed the transaction as an example of how coordinated public and private capital can be used to accelerate downtown revitalization. Economic Development Secretary Eric Paley, who chairs MassDevelopment’s board, noted that projects of this kind show how strategic partnerships between government and private developers can unlock new economic potential in urban centers.
With financing and incentive commitments in place, Synergy and its affiliate OCP Worcester Owner LLC are positioned to begin the conversion of the former office headquarters into almost 200 market-rate apartments. The deal underscores the growing use of incentive-supported capital structures to repurpose older commercial assets into housing while reinforcing Worcester’s efforts to attract new investment and residents to its downtown.
