• Fundraising to acquire, transform and operate a hotel in Manhattan’s Lower East Side into a 120-bed safe haven and clinic required the full involvement of JPMorgan Chase.
• Community Development Banking worked with the company’s Public Finance Housing and Public Finance Debt Capital Markets teams to design a financing solution for safe havens.
• This effort could benefit all groups involved and provide a template for future projects.
JPMorgan Chase offers a wide range of financing solutions. And if a single solution doesn’t meet the client’s needs, we create one.
Care For the Homeless, a non-profit operator of homeless shelters and a provider of healthcare services for the homeless, has raised the funds needed to acquire, remodel, and operate a hotel on Manhattan’s Lower East Side. Created a 120-bed safe haven and a federally approved health center. .
When Rockabill, an affordable transitional housing consultant working with Care For the Homeless, called Sharmi Sobhan, managing director of Community Development Banking, she said her team had a specific product in mind to support the deal. I knew I didn’t have one. However, the company did not have an off-the-shelf solution to support its funding needs, so the Community Development Bank saw this request as an opportunity to think outside the box.
Care For the Homeless President and CEO George Nashak said: Homeless. “This program creates a way for unprotected New Yorkers to get off the streets. Our clients receive housing and social services and quality health care that combine to lead them to permanent housing. This is a remarkable example of a public-private partnership that will promote social justice and close the gap in access to health care and housing for New York City’s most vulnerable citizens.The JPMorgan Chase team will make this happen. We are extremely grateful to them for being our partners.”
Bringing teams together across the company
Sobhan worked closely with Gloria Boyd, Vice President of Public Finance Housing and Annie Marinaro, Executive Director of Public Finance Debt Capital Markets to facilitate a $40.6 million loan for the development.
“Both the Public Fiscal Housing Group and the Community Development Bank team provide access to capital to fund the construction, restoration and preservation of affordable housing across the country,” Boyd said. increase. “While our two teams have traditionally served different client bases, we continue to see opportunities to leverage each other’s expertise in this area to expand the types of financing available to our clients. I’ve been looking for you.”
Sobhan and Boyd will work with Marinaro to provide construction and perpetual loans for these shelters, broaden the purchaser of these transactions and provide the company’s growing ESG-oriented investor base with access to additional debt products. We designed a solution that provides access.
“It has been great to provide community development bank clients with access to capital markets solutions,” said Marinaro. “Private placements provided a cost-effective and structurally favorable solution for long-term funding.”
The structure of the deal was unique to JPMorgan Chase, but Community Development Banks are well acquainted with this type of transformation. The group recently teamed up with affordable housing nonprofit Breaking Ground and New York City to transform a former Jehovah’s Witness hotel in Brooklyn into a 491-unit affordable supported housing complex. .
While this new collaboration had its advantages, its unique nature presented some challenges.
“Coordinating the timing of finalizing our contract with New York City’s Department of Homeless Services (DHS) is the ideal time to lock in expected loan debt repayments, real estate-related business decisions, and transaction interest rates. , etc., have been particularly cautious given the extreme volatility and the dramatic rise in interest rates,” Boyd said.
The $40.6 million credit tenant lease transaction consisted of a 30-year loan term and was priced for a loan life expectancy of approximately 20 years. A UK-based investor purchased the loan with the help of the company’s UK sales team. Debt service payments are guaranteed by annual appropriation payments made under the City’s contract with Care For the Homeless. Interest rates reflect existing market conditions, the financial strength of the counterparty, and the social benefits of the property.
Rocaville principal Katie Devine said: “In an environment of volatility in interest rates, especially in complex projects, Sharmi and her team can think outside the box and work with us to efficiently raise funds for Care for the Homeless. It is no surprise that we were able to achieve
“This loan features a one-year regeneration/conversion period, after which it will be amortized over 30 years. It’s backed by our contract with DHS, which has committed to providing us with the necessary funding,” said Boyd. “Loan interest rates were quoted as the spread to maturity of the underlying government bonds, reflecting the average term of the loans.”
This collaboration combines the expertise and internal referrals of a community development bank with access to long-term, permanent funding from local government investors. Public Fiscal Housing Group also now has access to developer clients seeking long-term funding under his HOME-STAT program in New York City. This allows DHS to fund the establishment of new shelters.
“It is exciting to see how new investors enter the Shelter financing space with this unique arrangement,” said Sobhan.
“We all know there is an urgent need for housing and shelter with access to essential services across the state. It could reduce the cost of manufacturing.”
Business collaboration template
The deal provides a path for continued collaboration across the company.
“We strive to issue bonds with investors who appreciate the social impact of the project and are also familiar with municipal credit exposure,” said Marinaro. “We look forward to continuing to expand our relationship with public finance and community development banks. There are many ways.”
“As a New York City resident, I am particularly proud of this initiative,” said Marinaro. “Access to safe and secure housing has a positive impact on the health and well-being of this underserved population and strengthens the resilience of our communities as a whole. what we do and is at the core of who we are.”
Originally posted on jpmorgan.com.