Housing Partnership Ventures has over the last two months closed its first two loans under its New Markets Tax Credit (NMTC) lending program. The loans, subsidized by the tax credit, provide below-market short- and medium-term financing for both housing and commercial projects.

The two transactions illustrate the basic products Housing Partnership Ventures provides. The first was a $2 million loan to an affiliate of Gulf Coast Housing Partnership (GCHP) for the purchase of a site for the The Muses affordable housing development in central New Orleans. GCHP will in turn sell the site to an unrelated owner, paying off the Ventures loan, and will serve as fee developer for the site.

“We looked carefully at the structure of the deal, and both we and our investor became comfortable with our designing an investment in GCHP as a development business, rather than the rental housing that will ultimately be built there,” said Matt Perrenod, Chief Lending Officer for the Housing Partnership Network, which operates Housing Partnership Ventures. “It also fits well with our underwriting philosophy, which emphasizes the abilities of the borrower and sponsor even more strongly than the specifics of the transaction.”

The second loan was made to an affiliate of BRIDGE Housing for the retail commercial portion of the Mandela Gateway development in Oakland, California. BRIDGE completed the mainly residential project two years ago, financing the commercial piece with its own equity and that of its partner, the Oakland Housing Authority. With long-term leases in place, BRIDGE this year sought to finance the commercial portion in order to recover its equity, and Housing Partnership Ventures provided a 7-year loan.

“Financing the commercial portion of the project was not easy,” said Ben Metcalf, BRIDGE’s project manager. “The retail portion was extremely important to us and the community, however, helping rebuild the community fabric in a neighborhood with very little new retail space. The Ventures New Markets loan provided the sort of low-cost financing we needed to support this effort.”

The Ventures New Markets program was made possible by a below-market line of credit underwritten by the Merrill Lynch Community Development Company, and made by a special NMTC affiliate. Merrill has placed an emphasis on investments in impacted communities in New York, New Jersey, Utah, California, and the Katrina-affected areas of Louisiana and Mississippi. Loan pricing is typically 300 – 350 basis points below what could be offered without the NMTC subsidy. Investments must comply with NMTC requirements. Click here to see term sheets.

Housing Partnership Ventures is looking to other New Markets investment strategies which may increase the range of projects we can look at. For more information, or to apply, please contact Matt Perrenod. Matt can also be reached by phone at (617) 259-1806.