Merchants Capital, New York City Provide $42M for Brooklyn Affordable Housing

Tredway has lined up $41.5 million in financing from Merchants Capital to acquire and renovate Restore Housing, a 138-unit affordable apartment complex in Brooklyn. The property, which opened over four decades ago, will receive an additional $10 million in capital improvements funded by Tredway itself.

Merchants Capital structured both the acquisition and construction financing for the deal. Tredway plans to modernize the aging complex while maintaining its affordability mandate. The investment totals roughly $51.5 million when combining the lender's capital with Tredway's equity contribution.

For renters, the renovation should mean improved living conditions, updated systems, and better building maintenance across the 138 units. Affordability protections remain intact, protecting current tenants from displacement during the upgrade process. The infusion of capital addresses a critical gap in Brooklyn's affordable housing stock, where supply remains tight and replacement costs for aging buildings typically run high.

For the lender, Merchants Capital gains exposure to the affordable housing sector, which offers stable cash flows backed by government subsidies and long-term regulatory restrictions. These deals typically carry lower risk than market-rate projects but demand specialized lending expertise.

For Tredway, the $10 million equity stake positions the firm as the operator and steward of an essential community asset. The capital improvements preserve the building's income-generating potential while meeting its social mission.

Brooklyn's affordable housing market remains under pressure. Properties built in the 1980s and earlier increasingly need major renovation to meet current building codes and tenant expectations. Deals like this one signal that specialized lenders and operators continue financing preservation over demolition and replacement.

THE BOTTOM LINE: Merchants Capital and Tredway's $51.5 million investment preserves 138 affordable units in Brooklyn while upgrading an aging property that serves hundreds of households.