Island Terrace in Chicago

Merchants Capital Provides $103 Million to Rehabilitate Affordable Housing Community in Chicago

by Channing Hamilton

CHICAGO — Merchants Capital has provided $103 million for the rehabilitation of Island Terrace, an affordable housing community situated across from the Obama Presidential Center in Chicago’s Woodlawn neighborhood. The financing consists of $54 million of debt and $49 million in Low-Income Housing Tax Credit(LIHTC) equity financing. Preservation of Affordable Housing Inc. (POAH), the owner and developer, was the borrower.

Island Terrace comprises 240 units across 21 stories. Prior to the recapitalization, only 88 units carried affordable restrictions. The new financing structure enabled POAH to expand the affordability restrictions to include nearly all units while extending the restrictions for at least 30 more years. Planned renovations to the complex include the replacement of the roof, windows, plumbing and electrical systems; a redesigned first floor with a community room and laundry facilities; and updated kitchens and bathrooms in all units.

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

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