Dealmaker: Merchants Capital Finances $13M in Gary, Ind.

Merchants Capital provided more than $13 million in financing to a joint venture between Gorman & Co. and the Gary, Ind. Housing Authority to rehabilitate Carolyn Mosby Apartments.

Located at 650 Jackson Street just west of downtown Gary, Carolyn Mosby Apartments was built by the Gary Housing Authority in the late 1960s as a public housing development. The eight-story building houses 142 units in a variety of one- and two-bedroom floor plans reserved for senior and/or disabled residents earning between 30 and 60 percent of area median income.

The property also received a $13 million allocation of tax-exempt bonds from the Indiana Housing and Community Development Authority, enabling GHA to partner with Gorman to convert it from public housing to a long-term Section 8 Housing Assistance Payment contract and perform much-needed renovations while continuing to provide rental assistance to its residents.

Merchants Capital facilitated the bond purchase through a $13 million Merchants Bank of Indiana construction loan. Following construction completion, the loan will convert to a $5.2 million permanent loan pursuant to a Freddie Mac Tax-Exempt Loan forward commitment serviced by Merchants Capital.

The property also received nearly $10 million in equity investments in return for federal Low-Income Housing Tax Credits and federal Historic Rehabilitation Tax Credits.

The financing will allow Carolyn Mosby Apartments to undergo both interior and exterior improvements, including updates to all electrical and plumbing fixtures to improve the energy efficiency and water usage throughout the property. The sponsors expect construction to wrap up in 2024.