Feds announce $23M loan for housing project

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A 132-unit housing complex recently developed in Fredericton has received a $23-million infusion from the federal government.

The Canada Mortgage and Housing Corporation announced a $23.6-million loan Tuesday for Micro Living Boutique’s development at 650 Waterloo Row that includes a mix of studio, one-bedroom, two-bedroom, and three-bedroom units.

Micro Living co-owner Chris Galea said the project likely wouldn’t have been possible without the fully repayable, low-interest loan from the CMHC’s Rental Construction Financing Initiative. He said the funding was only fully released when the building was finished. It opened in September 2022, and the final touches are now being added.

“It has been a real success story,” said Galea, who lives in Mexico, but whose company is based in Nova Scotia.

“We were very excited to pull off this project, especially where there’s such a high demand for housing in the Fredericton area. We’ve had a very positive response.”

Micro Boutique provided $1.72 million for the project. In addition to the financing initiative, the CMHC also spent $150,000 on seed funding for the development.

Galea said the Fredericton building is his company’s first in New Brunswick and features fully furnished units that were designed with multi-use equipment and without any wasted space. He said flexible leases are available, and what sets his buildings apart from other apartment complexes is that the units are smaller and relatively more affordable than others.

“The units pack a solid punch and provide us, and our tenants, with good value for the money spent,” said Galea.

Galea said constructing a new 132-unit building during the pandemic was tough, but his staff in Canada and patience from tenants made the project easier to manage. He said the building is geared toward young professionals, seniors, young families, graduate and undergraduate students, and single tenants.

Galea said Micro Boutique’s buildings are built within walking distance of universities and downtowns. He said he believes the federal government was enticed to support the project by his company’s track record of providing high-end accommodations to lower-income groups, ability to deliver what Ottawa wanted, and ability to give taxpayers “bang for their buck.”

“You would not normally be able to build a 132-unit building these days without spending upwards of $30 million or more,” he said.

“We have a good relationship with our banking partner, but they would have required a large down payment. If I had to directly finance that loan myself, it would have been too much for a small company like mine.”

CMHC spokesperson David Harris said the financing initiative that supported Micro Boutique’s project focuses on increasing the supply of new rental housing in markets where there’s a need for more rental units. He said the program provides incentives to developers through fully repayable, low-interest loans to build more purpose-built rental housing for middle-income Canadians.

“The financing initiative prioritizes projects that address a need for supply, demonstrate greater social outcomes, and meet or exceed minimum requirements for financial viability, affordability, energy efficiency, and accessibility,” Harris said in an emailed statement.

“Each application is assessed based on its own merit in accordance with program guidelines.”