Merchants Capital has closed on $97.8 million in financing to support the rehabilitation of Stuart Gardens, an affordable multifamily community in Newport News, Virginia. The 491-unit property, described as a two-phased affordable development, is being undertaken by Vitus Group and will modernize an existing historic residential complex while preserving income-restricted housing.
The capital package arranged by Merchants Capital is anchored by $62.8 million in U.S. Department of Housing and Urban Development 221(d)(4) permanent financing. In addition, Merchants Bank has provided $35 million in equity bridge loans, giving the project a combination of long-term HUD debt and near-term bridge capital to execute the rehabilitation plan.
The capital stack for Stuart Gardens also incorporates low-income housing tax credit financing, aligning the transaction with federal affordable housing incentives. The project will further benefit from green and resilient retrofit program financing through HUD, targeting energy-efficient upgrades and resiliency improvements across the property.
Stuart Gardens consists of 109 two-story residential buildings and a total of 491 units across both phases. Of these, 489 units, representing 100% of the residential inventory, are restricted to households earning up to 60% of the area median income, reinforcing the property’s position as a fully affordable community. Originally constructed in 1940, Stuart Gardens has been designated a historic property by the Virginia Board of Historic Resources.
Following completion of the rehabilitation, Stuart Gardens is expected to feature updated one-, two- and three-bedroom apartments within its existing multifamily footprint. The property is located in a mixed-use neighborhood southeast of downtown Newport News, positioning residents within approximately 1.5 miles of schools, public transportation options, recreational amenities, fire and police services, and grocery stores.
By combining HUD permanent financing, bank-provided bridge loans, housing tax credits, and green retrofit funding, the Stuart Gardens transaction illustrates a multi-layered capital approach to preserving and upgrading an established affordable housing asset in a historically significant setting.
