By Amara Osei

Merchants Capital has arranged $185 million in financing for the acquisition and rehabilitation (renovation) of Nostrand Houses, a 1,148-unit affordable housing community in Brooklyn’s Sheepshead Bay neighborhood. Nostrand Houses comprises 16 buildings dating from 1949 to 1951 across two contiguous sites in New York City.

What does the $185 million financing cover?

Merchants Capital arranged the $185 million transaction, while Merchants Bank provided the loan for the acquisition and planned rehabilitation of Nostrand Houses. The structure links the purchase of the property with capital work across 1,148 apartments, covering two stages of the investment: acquisition and physical renewal.

The AFL-CIO Housing Investment Trust (HIT) supplied $50 million of the total loan as co-lender (joint lender). Merchants Bank provided the remaining $135 million, so the two funding contributions account for the full $185 million package. Joshua Canan and Mathew Wambua led the transaction for Merchants Capital.

How will the six-phase rehabilitation proceed?

The rehabilitation began in October, although the announcement did not specify the start year. The program is expected to run in six phases over about 60 months, creating a staged schedule for work across 1,148 units and 16 buildings.

Capital improvements will cover individual apartments and building-wide systems. The announced scope contains five categories:

• Apartment improvements: New kitchens and bathrooms in individual homes.
• Building services: Electrified heating and cooling systems (electric heating and cooling equipment).
• Access and accessibility: New elevators and improved accessibility across the property.
• Environmental remediation: Lead and mold remediation.
• Security: Upgraded building security systems.

Why does the delivery structure matter?

The strategic logic is to divide a broad renewal into two work types and then stage both across six phases. Apartment-level kitchens and bathrooms cover interior upgrades within the 1,148-unit community; building-wide heating and cooling, elevators, accessibility, environmental work and security cover the systems serving 16 structures.

A 60-month schedule gives that combined scope a defined sequencing framework. It also places a property dating from 1949 to 1951 on a multi-year timetable. The two contiguous sites form one 16-building community, although the announcement did not assign particular buildings or work packages to individual phases.

The announced capital list does not quantify how much of the $185 million will fund apartments versus building systems. Nor did it provide a cost for each of the six phases, a completion date for each phase, or a named construction contractor. Those details remain outside the financing announcement.

How large is the lender partnership?

AFL-CIO HIT’s $50 million contribution forms part of the $185 million financing, with Merchants Bank supplying the other $135 million. The co-lender structure places the acquisition and rehabilitation of a 1,148-unit property behind two institutional funding sources, with Merchants Bank providing the larger share.

The $50 million contribution from HIT and $135 million from Merchants Bank establish the lender split but do not reveal the economics of the loan. The announcement omitted the interest rate, scheduled principal repayment, maturity, unit rents and affordability terms. For the 16-building transaction, those missing terms remain central to assessing how the $185 million package supports the six-phase capital program over about 60 months.

What has been secured?

Merchants Capital has arranged a $185 million acquisition-and-rehabilitation package for a community that combines 1,148 homes with 16 buildings on two neighboring sites. The immediate decision covers financing; the larger operational task is the six-phase physical renewal that began in October and is expected to last about 60 months.

Within that program, new kitchens and bathrooms will modernize individual apartments, while electrified heating and cooling, new elevators, improved accessibility, lead and mold remediation and upgraded security will renew building-level services. The financing plan therefore addresses both the interior scope for individual homes and the infrastructure supporting 1,148 affordable units.