WASHINGTON, DC–Fannie Mae has announced its first fund under its recent authority to resuming investing in the Low Income Housing Tax Credit market. It has partnered with Raymond James Tax Credit Funds for a $100 million offering.
The fund will focus on markets that were impacted by Hurricane Harvey last year, as well as rural markets and Native American housing, backing multifamily projects with funding for rehabilitation and construction. The fund will also provide financing for resiliency features in properties located in areas subject to flood and storm activity. The fund is expected to make its first investment in the first quarter of 2018.
The fund will behave as a typical fund does, with the total purchasing power increasing as debt is added to the deals — which will depend on whether the LIHTC is a 4% or 9% transaction and what the targeted income levels are.
This is the first fund out of the gate for Fannie Mae; there will be other partnerships with other syndicators, Dana Brown, vice president of LIHTC Investments for Fannie Mae tells GlobeSt.com. “We're currently in the process of reviewing potential syndicator partners that have the capacity and performance history and expertise that best aligns with our goals,” he says.
How many funds there will be remains to be seen; they won't necessarily all be at $100 million. “The number of partners that we have will depend on where we are with our volume limit and what the specific needs of the market is — and that changes over time,” Brown says. “There are different syndicator partners that have a greater or lesser degree of knowledge or expertise in a specific type of deal or geography.”
However it shakes out, the cap for both GSEs will be $500 million each.
That was the cap set last November by the Federal Housing Finance Agency when it gave Fannie Mae and Freddie Mac authorization to resume their LIHTC purchasing activity in 2018. At that time, both GSEs indicated they would partner with experienced LIHTC syndicators.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
