CARMEL, Ind. (Aug. 23, 2019) – Mortgage banking firm Merchants Capital has secured $21.4 million in funding using a Fannie Mae Mortgage-Backed Security (MBS) as collateral for new Tax-Exempt Bonds (M.TEB), combined with 4% low income housing tax credits (LIHTC). The funding was the first of its kind in the state of Indiana and sourced on behalf of long-time Merchants Capital customer, the Gene B. Glick Company, for the preservation of Carriage House of Evansville, a Section 8 housing development in Evansville, Indiana.
The execution utilized publicly-issued tax exempt bonds and 4% tax credit equity, provided by PNC Bank, to fund approximately $11 million in repairs, renovations and upgrades to the community. Carriage House of Evansville dates back to 1978 and is a 100% Section 8 affordable housing community serving tenants at 60% of the area median income (AMI) or less.
Fannie Mae’s M.TEB solution provides borrowers with a lower interest rate and significant savings over the life of the loan, offering a loan-to-value (LTV) ratio of up to 90%. This execution can be used to finance the construction, acquisition or rehabilitation of Multifamily Affordable Housing (MAH) properties.
“Fannie Mae continues to look for ways to create and preserve affordable housing,” said Angela Kelcher, Director of Affordable Housing at Fannie Mae. “The MBS as Tax-Exempt Bond (M.TEB) execution provides efficient, low-cost financing and we were excited to work with Merchants to support the preservation of affordability while also improving the quality of housing for the residents.”
CRG Residential is the general contractor on the project and is performing all renovations at the site. All units are being modernized using CRG’s RAPID program, which completely renovates and modernizes units in just days, limiting disturbance to existing tenants. Updates include new solid surface flooring, cabinetry and countertops, energy efficient light fixtures, appliances, doors and trim, and complete bathroom renovations.
“We are excited to partner with Fannie Mae and Glick to preserve much-needed affordable housing in the state of Indiana,” said Michael R. Dury, president of Merchants Capital. “Fannie Mae’s M.TEB program gives access to a lower cost of capital, which allows the development team to substantially renovate the community. As with any project involving Glick, the company’s vision and strategy is first class and at the end of the day, the completion of this project is a win for the tenants, which is wonderful.”
Additional Carriage House of Evansville improvements include entry signage, asphalt and storm drainage repairs, roofing, modernized elevators and playground equipment, as well as the addition of a bark park, lakeside picnic area, fitness center and an internet cafe.
“We’re grateful for our long-standing relationships with Merchants Capital and Fannie Mae that enable us to undertake renovations like this one at Carriage House of Evansville,” said David Barrett, president and chief executive officer at Glick. “Ultimately, this project illustrates our commitment to our residents – preserving their affordable housing and providing them high-quality apartment homes.”