Merchants Capital Finances $103M for Affordable Chicago Property

Merchants Capital has provided more than $54 million of debt and $49 million in Low-Income Housing Tax Credit (LIHTC) equity financing for the rehabilitation of Island Terrace, a 21-story affordable apartment complex located across from the Obama Presidential Center in Chicago’s Woodlawn neighborhood. 

Preservation of Affordable Housing, Inc. (POAH), a national non-profit affordable housing developer, owns the property. Merchants Capital maximized LIHTC equity via a unique structure called “twinning,” which leveraged both 4% and 9% tax credits issued by the IHDA and the City of Chicago.

The 4% and 9% equity syndication generated $31.8 million and $17.3 million, respectively, matched by two corresponding HUD-insured permanent loans totaling more than $22 million and two equity bridge loans totaling more than $32 million. Merchants Bank provided $26.5 million for the property acquisition in 2021. 

Additional funding includes a combined $24 million of secondary loans from the IHDA and the City of Chicago. The AFL-CIO Housing Investment Trust also contributed funds through its purchase of the securitized HUD Loans.

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