CHICAGO – Financial services company Merchants Capital (MCC) today announces the closing of $102 million in combined debt and equity financing to support the redevelopment of Granada Homes, a historic affordable housing property located along the iconic River Walk in the heart of downtown San Antonio. Originally constructed in 1927 as the Plaza Hotel, the property currently is a mixed-use, 14-story high-rise housing underserved low- and very-low-income seniors.
The financing for the project includes a $43 million Merchants Bank of Indiana (MBI) construction loan and $35 million in Merchants Capital syndicated tax credit equity. Merchants Capital also secured a forward commitment for $24 million from Fannie Mae for permanent financing with the mortgage-backed security being purchased by the AFL-CIO Housing Investment Trust (HIT). The innovative financing included one of the first executions of a new financial structure created by the HIT called a “Build to Bond,” which ensures that the project will be constructed with 100% union labor.
“Completing this transaction in a record 60 days required the focus and attention of multiple disciplines across the Merchants product platform,” said Lee Oller, Executive Vice President of Merchants Capital’s Chicago office. “We are incredibly thankful to our developer and our long-term partnership with the AFL-CIO Housing Investment Trust, which brought the project to fruition.”
Many observers feared that the building would be sold and converted into a high-end hotel or market-rate condos, displacing its elderly low-income renters.
“Through this transaction, the San Antonio Building & Construction Trades Council will be able to keep the property, fully renovate it, create good union construction jobs with good pay, and make this historic building available as affordable housing for seniors for years to come,” said Chang Suh, the HIT’s CEO. “Together this allows the owners to provide strong benefits that stay in the community.”
“The Merchants Capital equity team was proud to provide $35 million in federal historic, state historic and federal low-income housing tax credit equity financing to revitalize this community, in a first-of-its-kind financing structure in partnership with the AFL-CIO Housing Investment Trust,” said Julie Sharp, Senior Vice President of Tax Credit Equity at Merchants Capital. “Our nimble financing structure allowed the project to close in record time, and further solidified Merchants as a single-point of execution for all aspects of debt and equity financing for affordable housing projects across the United States.”
Granada Homes is comprised of 265 studio and one-bedroom units set aside for low-income elderly households. The detailed renovation plan includes upgrades to the finishes and offerings of all units, designed to specifically meet the needs of seniors. The redevelopment will also expand the affordable housing stock through the conversion of the currently under-utilized commercial space to additional affordable units. The loan will result in material improvements to the major building system and significant savings in operating costs. Community and amenity spaces will be upgraded and modernized.
Financing for the property also includes a mark-up-to-market of the Section 8 Housing contract, an 8(bb) transfer of a Housing Assistance Payments (HAP) Contract and the issuance of enhanced vouchers, as well as a 100% ad-valorem tax exemption.
“We are excited for the partnership with Merchants and the AFL-CIO Housing Investment Trust and look forward to enhancing and expanding affordable housing and good union jobs in San Antonio alongside our partner, San Antonio Building & Construction Trades Council,” said Victor Atkins and Pat Biernacki, the Principals of Canopy, the developer working in partnership with the local labor organization. “The Granada transaction required tremendous creativity within a tight closing time. We feel very fortunate to have found a partner in Merchants that brought the level of talent, commitment and resources to the table necessary to not only ensure transaction closing, but also the continuation of a five-decade legacy of quality, affordable senior living at Granada Homes.”
Granada Trade Council Housing Inc. is a 501(c)(4) non-profit with the mission of providing rental housing to low-income elderly persons, directed by the San Antonio Building & Construction Trades Council.