Merchants Capital secures $97.8 million for 491-unit affordable development in Newport News, VA.

Newport News, VA Merchants Capital secured $97.8 million in financing for the rehabilitation of Stuart Gardens, a 491-unit, two-phase affordable multifamily property developed by Vitus Group.

Merchants Capital secured $62.8 million in U.S. Department of Housing and Urban Development (HUD) 221(d)(4) permanent financing and $35 million in equity bridge loans provided by Merchants Bank. Stuart Gardens’ capital stack also includes low-income housing tax credit (LIHTC) equity, federal and state historic tax credits and Green and Resilient Retrofit Program (GRRP) financing via HUD for energy-efficient improvements.

“Merchants is proud to serve as a financing partner for Stuart Gardens and support its development through various stages, most recently in providing interim financing in advance of additional funding,” said Matt Kaercher, senior vice president of originations at Merchants Capital. “Merchants’ experience and relationship with HUD played a key role in serving the project, and we celebrate Vitus Group’s effort to rehabilitate 491 affordable homes in the Newport News community.”

Stuart Gardens comprises 109 two-story buildings, with 489 of 491 units across both properties, 100% of the residential units, restricted to families earning 60% area median income (AMI), under a Section 8 Housing Assistance Payment (HAP) contract. Constructed in 1940, it has been designated as a historic property by the Virginia Board of Historic Resources.

External repairs will include a new playground, connections to an adjacent park and walking path, roofing, siding and exterior doors and windows. In-unit repairs will include replacement of existing flooring, updated appliances, new kitchen cabinetry, and updated bathrooms.

“Stuart Gardens has been home to Newport News families for more than 80 years, and this renovation ensures it will remain affordable for decades to come,” said Samantha Cullen, director of development at Vitus. “We’re grateful to Merchants Capital for helping us secure the financing to deliver modernized homes, lower energy costs and new resident services, all while preserving the community’s historic character.”

During the past 30 years, Vitus Group has provided more than 130 properties and 25,000 affordable multifamily units across 30 states. The company is among the nation’s leading experts in affordable housing, with proficiency in acquiring, renewing, and preserving federally subsidized housing.

Upon completion, Stuart Gardens will offer updated one-, two-, and three-bedroom apartments with refinished hardwood flooring, fully equipped kitchens, washers and dryers, and renovated bathrooms. The property will feature a playground, clubhouse, and on-site management.

Located in a mixed-use neighborhood southeast of downtown, Stuart Gardens is within a 1.5-mile radius of schools, public transportation, recreation areas, fire and police stations, and grocery stores.

Construction began in August 2026 and is expected to be completed in January 2028.