🔒Former Fallon HQ apartment conversion secures $51M in financing

The developer converting the former Fallon Health headquarters in downtown Worcester into 198 apartments has secured more than $51 million in financing for the project expected to be completed in August. Boston real estate firm Synergy, through affiliate OCP Worcester Owner LLC, received $51.17 million in loan financing for the redevelopment of the 11-story office building at 10 Chestnut St. into 198 market-rate apartments, according to a Monday press release from state agency MassDevelopment. Rhode Island-based Washington Trust provided $47.57 million in financing, while MassDevelopment provided a $3.6-million Housing Development Incentive Program (HDIP) tax credit bridge loan. “Washington Trust is proud to lead the financing for one of the most significant conversion projects in Massachusetts,” James Brown, Washington Trust senior executive vice president and chief commercial banking officer, said in the press release. “This investment reflects our belief in the importance of strengthening communities and driving economic growth.” The redevelopment is part of an approximately $73-million project to convert the former Fallon Health headquarters, known as One Chestnut Place, into 41 two-bedroom units, 85 one-bedroom units, and 72 studio apartments. Amenities are expected to include a fitness center, rooftop deck, outdoor patio, swimming pool, and underground parking. Construction on the conversion began in May and is expected to be finished in August. The project is part of a broader plan by Synergy to redevelop the One and Two Chestnut Place complex. The adjacent four-story building, Two Chestnut Place, is being converted into 22 affordable apartments restricted to rents affordable to lower-income residents. That project is expected to cost $14 million. Synergy first proposed converting the former Fallon headquarters into housing in 2024 as demand for office space declined and developers across Massachusetts began pursuing office-to-residential conversions as a way to add housing and reuse underutilized downtown buildings. The Fallon conversion is the largest office-to-residential conversion in Massachusetts, according to MassDevelopment. The project has received other state incentives, including a $4-million HDIP award and a $3.6-million Commercial Conversion Tax Credit from the Massachusetts Executive Office of Housing and Livable Communities. The City of Worcester has provided the redevelopment with a 15-year tax increment exemption. The building previously served as the headquarters for insurance company Fallon Health before the nonprofit relocated its headquarters into the One Mercantile building, which has since updated its prominent signage with Fallon’s logo. In January, Fallon announced plans to be acquired by Somerville-based Mass General Brigham Health Plan, creating what is expected to be the third-largest insurer in Massachusetts. Brad Kane is editor of the Worcester Business Journal.