Merchants Capital Provides $35M in Agency Financing for Multifamily Homeless Shelter
Merchant Capital has provided $35.4 million in Freddie Mac financing for Jamaica Apartments — a 133-unit multifamily transitional housing facility in Jamaica, Queens, Commercial Observer can first report.
The seven-year Targeted Affordable Housing Capital Markets Execution loan was provided to Bayrock Capital and not the first time that Merchants Capital and Freddie Mac have partnered; the two also worked together to provide $51 million in financing for 267 Rogers, a homeless shelter in Crown Heights, Brooklyn, in June 2019.
Jamaica Apartments is a two-building multifamily property built in partnership with the New York City Department of Homeless Services (DHS) to provide transitional housing to homeless families. One hundred percent of units are reserved for transitional housing.
“A project of this magnitude and significance, especially during the COVID-19 crisis, is needed now more than ever,” Merchants Capital Vice President Michael Milazzo said. “The Right to Shelter obligation, which provides safe, multifamily housing with no required tenant contributions for homeless New Yorkers, is crucial as many Americans are out of work or otherwise struggling financially throughout these unprecedented times.”
The deal was signed up in fall 2019 but closed during the COVID-19 pandemic. “We probably had a three week period between when businesses were shutting down to when we closed the deal,” Milazzo said. “We were actively working with Freddie and legal counsel and luckily with cooperation and communication everyone was able to continue with business as usual via multiple conference calls. The borrower knew that time was of the essence because every day was different; we didn’t know where we would end up for rate locking, where the market would be with Treasury rates, so for us it was a case of trying to move forward and not allow the COVID situation to stop the deal timeline.”
The deal closed with the same terms that existed pre-pandemic, Milazzo said.
The residents of Jamaica Apartments have access to social services and mental health counseling, as well as education and career training to help them get back on their feet. Additionally, each unit has its own private bathroom and kitchen.
Merchants Capital has been providing affordable housing financing for 30 years.
“At Merchants we’re very committed to providing affordable lending for affordable housing,” Milazzo said. “It’s something we care very deeply about.”
Speaking of Jamaica Apartments specifically, Milazzo said: “This is something that’s a much better product than what was out there in the past. A lot of shelters will put people in hotels, where it’s hard to get proper treatment for tenants. With this program they’re consolidating those sites using more of a multifamily structure. We feel it’s very helpful to help tenants get back on their feet rather than giving them a bed for the night and then putting them back on the street.”
CORE, a community-based, non-profit human services organization is also involved in the project. Mawah, N.J.-based boutique mortgage brokerage Brook Hollow Capital helped facilitate the closing process.