Mezzanine Debt Fund
The Fund
Access low-cost mezzanine debt up to 90% loan-to-value! Purchasing in higher-cost neighborhoods is now possible. Take advantage of historically low rates on first mortgages and below-market, flexible mezzanine rates.
The Mezzanine Debt Fund provides flexible, low-cost subordinate debt to developers who purchase existing, functioning rental buildings in higher-cost and emerging neighborhoods.
Depending on the project, the Fund can pair well with agency debt, or serve as bridge or gap financing. New construction or substantial rehab projects may also be eligible.
Loan fund borrowers may also qualify for a new property tax relief program!
Process and Terms
Borrowers secure a first mortgage from their chosen lender, covering up to 80% of a multifamily building’s value. The fund covers an additional 10% of a building’s value at favorable terms, cutting a borrower’s equity requirement in half.
Ready to get started? Contact Ros Meerdink at rosamond.meerdink@cicchicago.com or 312.870.9944.
| Rates | Rates are highly competitive: please contact us for a project-specific term sheet. |
| Term | 10 years |
| Amortization | Interest only |
| Payments | Must pay, interest only |
| Combined LTV | 90% |
| Prepayment | No penalty |
| First Mortgage Provider | Community Investment Corporation, a CIC partner lender with subordination agreement, or any outside bank of your choice willing to partner. |
| Affordability | 20% of units, but owners are not expected to artificially lower rents. Using existing subsidy programs, developers maintain cash flow through the same process and speed of traditional multifamily financing. We can help connect you with sources of subsidy. |
| Property Tax Relief | Fund affordability requirements may help borrowers may qualify for property tax relief under a new property tax incentive. Borrowers may be able to receive a 25% reduction in assessed value if they meet the other requirements of the incentive. |
Eligible Areas
The Fund finances projects throughout the Chicago Metro area, focused on areas that are higher cost, or where costs have been increasing.
Not sure if your project qualifies? Review the map below or reach out to the Fund’s Loan Officer, Ros Meerdink, at Rosamond.Meerdink@cicchicago.com.
Please note: the map is simply a visual guide–we can finance projects outside of these areas on a case by case basis.
Background
What if we could harness the speed and volume of private capital to preserve and create affordability, without requiring developers to take a loss on affordable units?
Our mission at The Preservation Compact is to preserve affordable rental housing. Through our longstanding partnerships with lenders, developers, and government agencies we know that traditional approaches to creating affordable housing are important but insufficient.
Enter CIC’s new Mezzanine Debt Fund: low-cost financing for developers who purchase existing rental buildings in strong markets and keep 20% of the units affordable. Owners are not expected to artificially lower rents. Using existing subsidy programs, developers maintain cash flow through the same process and speed of traditional multifamily financing.
Why focus on higher-cost neighborhoods?
Over the past couple of years, many researchers have made the case for creating and preserving affordability in strong and strengthening housing markets.
These opportunity areas provide access to better jobs, schools, and transit—especially in contrast to areas of concentrated poverty—and moving to better areas improves education, earnings, and overall life chances.
However, living in those areas is costly. Public capital dollars to fund the construction of new affordable rental housing are dwindling and woefully oversubscribed.
Interested in learning more? Register for the Fund’s e-newsletter here to receive updates on the Fund, information on terms and projects, and view property listings in eligible areas.