Presented By: JPMorgan Chase
JPMorgan Chase Simplifies Affordable Housing Financing
Future Of Affordable Housing brought to you by JPMorgan Chase
While there has long been a pressing need for affordable housing, it has perhaps never been as dire as it is today. The White House released a statement recently saying that fewer homes have been built over the past decade than at any time since the 1960s, and that there is currently a national shortfall of 1.5 million units.
“The need for decent, safe, and affordable housing is greater than it’s ever been,” said Mark McCann, Managing Director, Tax-Oriented Investments (TOI) at JPMorgan Chase.
“If we can’t keep up with the demand for affordable housing, it may leave people with a tough choice between paying rent or putting food on the table,” said Vince Toye, Managing Director, Community Development Banking and Agency Lending at JPMorgan Chase.
Given this urgent need, McCann and Toye believe that financial institutions are rising to the challenge.
At JPMorgan Chase, the TOI group works closely with Community Development Real Estate (CDRE) to ensure a seamless, efficient experience for development clients in need of debt and equity financing.
“Affordable housing transactions are complex, and if we can make it easier on our clients by providing debt and equity under the JPMorgan Chase umbrella, then that’s what we do,” Toye said. “Without both debt and equity, these developments can’t take place. Allowing our clients to draw financing from different parts of our firm brings these projects to life much faster. The ease of doing business with the same entity allows developers to streamline their onboarding and payment integration processes.”
With this level of collaboration, the firm can provide complex financing arrangements for different types of affordable housing developments.
“We can pair our debt and equity to benefit transactions of all types,” McCann said. “Among the hundreds of transactions JPMorgan Chase debt and equity have worked together on in recent years, there are new construction transactions, historic gut rehabilitations, tenant-in-place apartment renovations, 9% and 4% Low Income Housing Tax Credit (LIHTC) investments, and transactions for the homeless, veterans, and others with special needs.”
McCann shares the details of one deal that required especially complex financing arrangements.
“Among recent deals we worked on in concert with our colleagues on the Community Development Banking team, the North Sheffield transaction was one of the most complicated in Chicago,” he said. “There were two distinct financing structures: one for the 405-unit renovation of two apartment towers for seniors and one for the 80-unit new construction for families situated between the towers. CDRE bankers Chet Shedloski and Jack Bernhard worked together with TOI deal manager John Kavanaugh to craft these financing structures, which included one Community Development Banking loan for the towers’ renovation and one for the new construction. Layered on top of the loans was a single investment through the Tax-Oriented Investments team—not just any investment, but at $95.4 million, the largest in an affordable housing transaction in TOI’s history! Our syndication partners at Boston Financial Investment Management and our development partners, the Chicago Housing Authority and PIRHL Developers, were instrumental in bringing us this opportunity to work together on this landmark property to preserve and create 485 units of affordable and market rate housing in Chicago’s high-priced Lincoln Park neighborhood.”
The North Sheffield transaction is just the tip of the iceberg in terms of deals where JPMorgan Chase provided debt and equity financing to bring projects to life. Others include:
- Talavera Lofts in Austin, Texas: This complex will include 91 units of affordable rental housing by DMA Development Co. CDRE banker David Saling worked closely with TOI deal manager Paul Vlamis to provide a $13.4 million construction loan converting into a $4.4 million permanent loan alongside $13.9 million of equity financing.
- DESC Greenlake in Seattle, Washington: The property will offer 124 affordable studio units with supportive services for single adults who are disabled or formerly homeless. CDRE’s Bob Powers and TOI deal manager Ryan Kin worked together to provide $19.8 million in equity alongside a $18.1 million taxable construction loan for developer Downtown Emergency Service Center.
- Fruitvale Transit Village in Oakland, California: BRIDGE Housing Corporation and The Unity Council will build 181 units of transit-oriented affordable housing for working families. TOI’s Paul Vlamis worked with CDRE to provide $56.8 million in equity financing alongside a $89.8 million construction loan.
- Colonial II Apartments in Rome, New York: JPMorgan Chase provided valuable assistance for developer Beacon Communities Services LLC’s gut rehab of 74 central New York apartments. CDRE’s Mark Migliacci and TOI deal manager Brigid Browne closed the project’s funding gap with $19 million in equity and a 31-month, $20.5 million direct-pay letter of credit.
- Shoreline Villas in Fort Walton Beach, Florida: The state’s panhandle will be home to a new 72-unit affordable housing development within a three-story garden-style building. CDRE’s Tammy Haylock-Moore and TOI deal manager Amber Beeman helped provide $10.8 million in equity alongside a $11.9 million construction loan that will convert into a $5.2 million permanent loan.
JPMorgan Chase’s debt and equity financing has shown how valuable the firm has become for developers as they prepare crucial new affordable housing projects.
“Understanding and anticipating our client’s needs comes first and foremost,” Toye said. “The relationship between our Commercial Banking and Corporate & Investment Bank teams allows us to efficiently provide a suite of financial services to drive complex affordable housing transactions across the finish line. At JPMorgan Chase, we strive to be a catalyst of change in the hopes of ending the housing crisis. Working hand-in-hand internally allows our clients to collaborate with a valued provider to develop much-needed affordable rental units at a faster pace in the neighborhoods that need them the most.”
View more articles on affordable housing here.