Freddie Mac and RBC Capital Markets’ Tax Credit Equity Group have closed a $180 million Low-Income Housing Tax Credit Fund, and they have already completed several transactions. Ten transactions have closed, including two in Puerto Rico and eight in New York, South Carolina, Tennessee, Texas and West Virginia.

The closing marks Freddie Mac’s fourth LIHTC fund since re-entering the market in 2018, and the first fund managed by RBCCM. The LIHTC program is the mechanism used to finance a majority of affordable rental housing across in the U.S.

Freddie Mac and RBC fund will invest in the development and preservation of affordable rental housing across the U.S. and Puerto Rico. The focus is on transactions in areas that have been underserved over the past decade, such as rural communities and intensive supportive services for their residents. It will also invest in supportive housing for special needs populations and housing in disaster affected areas.

The two investments in Puerto Rico serve the Caguas community that hurricanes Irma and Maria devastated in September 2017, and help build the José Gautier Benítez mixed-finance communities, on the site of a demolished public housing development.

The 238-unit family phase will receive a $37.5 million LIHTC equity investment, and the 200-unit senior phase will receive a $28.9 million investment. Together with $38.5 million in Community Development Block Grant-Disaster Recovery funds and $23.2 million in other public funds, funding for these developments is a substantial public-private partnership to assist Puerto Ricans most affected by natural disasters.

The buildings will have separate community rooms, on-site management offices, and a common area and courtyard. More than 80 percent of the family units will be affordable to tenants earning 60 percent or less of area median Income, and all the senior units will be affordable to seniors age 62 or older making 60 percent or less of the area median income.

The buildings have been designed to withstand future hurricanes and tropical storms and include backup generators that are sufficient to power the entire development in the event of a prolonged outage.

“Our fund will provide stability to underserved markets and deliver equity capital for affordable housing to communities across the U.S.,” said David Leopold, vice president of targeted affordable sales and investments at Freddie Mac. “The investments in Puerto Rico are particularly important to us. We all watched with horror as hurricanes ravaged the island and residents went without power for months. Among its many important investments, our fund with RBCCM is helping to build housing that is both affordable and resilient to future storms.”

NAPA Ventures has sold four Dallas-based properties--Westwood Apartments, Ravenwood Apartments, Oates Creek Apartments and Brandon Mill Apartments.

Combined these units make up roughly 700 of NAPA's almost 4000-unit portfolio, and are the latest sales completed by the real-estate investment firm.

"As simple as it sounds, we executed our business plan and sold the assets," said Glenn Gonzales, Co-CEO of NAPA. "A hot Dallas market coupled with years of experience has led us to great success here."

[caption id="attachment_9201" align="alignright" width="300"] Dallas[/caption]

NAPA's business plan going in was to renovate the exterior of buildings and interior units of each property to increase profitability and provide a great living experience for its residents. These updates include a tremendous improvement to amenities, makeover of landscaping, parking lots, exterior paint and upgrading the exterior lighting. Interior unit renovations include: upgrades to countertops, cabinets, floors, two-tone paint, and trendsetting black appliances.

"We do three things very well – we find value where others can't, fix things that are broken and make our equity partners happy. That is what we did here," said Shravan Parsi, Co-CEO of NAPA. "NAPA planned to exit the properties in three to five years, however, we exceeded our three-year projected returns and exited the deal.”

With the disposition of Ravenwood, Oates Creek, Brandon Mill and Westwood, NAPA plans to sell its 650-unit Montecito Creek Apartment Homes in Mesquite, Texas, and its 159-unit Pleasant Creek Apartments in Lancaster, Texas early this year.

NAPA has a strong pipeline of Multifamily & CRE deals with planned off-market acquisitions in all the major markets of Texas.

Freddie Mac’s multifamily division set a record with $77.5 billion in loan purchase and guarantee volume for 2018, and $500 million in low-income housing tax credit equity investments. This year’s production beats the previous record of $73.2 billion that was achieved 2017. Overall, the company financed more than 860,000 rental units, more than 90 percent of which are considered affordable to low- and moderate-income families making 120 percent or below of the area median income.

[caption id="attachment_7455" align="alignright" width="300"] Debby Jenkins[/caption]

“In the last decade, we have fundamentally transformed into a company that thrives on innovation,” Debby Jenkins, executive vice president and head of Freddie Mac Multifamily. “We’re working to harness that innovation every day—to create and enhance offerings to meet customer’s diverse needs, to lower our cost of capital and protect taxpayers with innovative securities, and to lead the multifamily industry into its next great chapter.”

In addition to the overall business volume, Freddie Mac served all corners of the multifamily market through its range of offerings, including Small Balance Loans, Targeted Affordable Housing and Green Advantage businesses.

Also, the company securitized a record $72.8 billion through its many securitized deals, transferring a majority of expected and stress credit risk to third-party investors.

Of Freddie Mac's total volume of $77.5 billion, $44.9 billion was not subject to the Federal Housing Finance Agency's volume cap, while $32.6 billion was subject to the volume cap. Uncapped transactions can include certain loans for affordable housing, smaller multifamily properties, seniors housing, manufactured housing communities, and energy- and water-saving improvements.

“As we look forward, we’re going to continue working to address the persistent affordability challenges facing countless renters,” said Jenkins. “In fact, far too many Americans are struggling to find suitable housing at a reasonable price, and we are continuing our work toward innovations that can help."

Freddie Mac Multifamily 2018 Highlights

In addition to the record $78 billion in total production, the company reached the following milestones:

• A record $8.1 billion in Targeted Affordable Housing Loans.
• More than $8.3 billion in Small Balance Loans, up from $7.8 billion in 2017
• Almost $23.1 billion in Green Advantage loans for energy- and water-saving improvements to workforce housing.
• LIHTC Equity Investments totaling $500 million—Freddie Mac’s first LIHTC equity investments since 2008.

Additional highlights include:

• $4.1 billion in Seniors Housing Loans, including apartments for seniors.
• $2.5 billion in Student Housing Loans
• $1.8 billion in manufactured housing community loans

More than 90 percent of the eligible rental units Freddie has funded are affordable to families with low-to-moderate incomes making 120 percent or less of the area median income.

Fannie Mae has priced its first Multifamily DUS REMIC in 2019 totaling $996.5 million under its Fannie Mae Guaranteed Multifamily Structures, also known as Fannie Mae Gems, and its latest green offering.

"This marks Fannie Mae's ninth Green GeMS deal; the desk continues to bring alternative Green investments to the Green MBS market, while providing the same solid credit performance to our established DUS and GeMS investors,” said Dan Dresser, vice president, for multifamily capital markets, trading and credit pricing for Fannie.

Fannie Mae's multifamily green financing business provides financing through several different Green product offerings, encouraging apartment building owners to make energy and water savings improvements to their properties.

In addition, the Fannie Mae Green Financing Business provides financing to properties holding a third-party, Fannie Mae approved green building certification. Fannie Mae introduced the Green MBS product to the market in 2012 and has issued over $51 billion in Green MBS since the program’s inception.

"Because the [deal] is fully collateralized by our Green Rewards MBS, the deal supports the reduction of greenhouse gases, as well as the reduction of utility costs for families and individual tenants through retrofits to existing, aging Multifamily housing in the United States,” said Chrissa Pagitsas, director of multifamily green financing business at Fannie.