Mortgage banking firm Merchants Capital has secured financing for the development of a $19.7 million mixed-income workforce housing community in Rochester, Minnesota. Merchants Capital secured the loan through the first Freddie Mac Non-LIHTC Forward Commitment on behalf of Real Estate Equities.
Technology Park Apartments, the 164-unit affordable housing complex, will help to ease the city's affordable housing crisis, as Rochester was recently ranked one of the lowest metropolitan statistical areas in the U.S. for housing affordability by Nationwide Economics, a research firm. The project closed on Sept. 5, 2018.
"We appreciate the opportunity to assist in the development of this housing community and the chance to help close Rochester's affordable housing gap," said Michael Dury, president of Merchants Capital. "We were able to simplify the process with our ability to provide the construction financing through our parent company, Merchants Bank, and also offer the Freddie Mac Non-LIHTC Forward Commitment product for the long-term permanent financing."
The apartments were financed through a 10-year Non-LIHTC loan where the interest rate was locked at the closing of the construction loan. Non-LIHTC forwards are unfunded, forward commitments for affordable housing developed by nonprofits and subsidized, rent-restricted affordable housing that for-profit developers can use for their new multifamily construction or substantial rehabilitation projects.
"We are very excited to be on the forefront of developing a modern workforce housing product that is not heavily reliant on government funding sources," said Alexander Bisanz, director of acquisitions at Real Estate Equities. "Partnering with the Greater Minnesota Housing Fund to provide low-cost, mission-driven equity, as well as structuring attractive financing with Merchants Capital, truly allowed us to get this project off the ground."