Regions Bank has acquired First Sterling Financial, a longtime low-income housing tax credit (LIHTC) syndicator and asset management business.
Since its founding by Martin and Ann Soja more than 30 years ago, First Sterling has raised more than $1.9 billion in investor equity through both proprietary and multi-investor funds. This investor equity has been used to support more than $3.5 billion of development in 700 properties containing over 30,000 rental units in 45 states, Puerto Rico, and Washington, D.C.
This is the third LIHTC syndicator to change ownership this year. Earlier, Omni Holding Co. acquired CREA, formerly City Real Estate Advisors, and ORIX Corp. acquired Boston Financial Investment Management Co.
One industry observer said the deals appear to put each LIHTC syndicator in a better position with strong owners.
Regions officials said the acquisition complements the bank’s community investment capital, real estate, and capital markets capabilities to serve more clients and communities.
“Regions has a long history of supporting affordable housing developments that benefit communities through direct investment in low-income housing tax credits,” said John Turner, head of Regions’ Corporate Banking Group, in a statement. “The addition of First Sterling’s industry-leading syndication and asset management capabilities will allow us to grow non-interest revenue and offer clients additional solutions to meet the affordable housing needs of more communities.”
The bank is one of the nation’s largest participants in affordable housing finance through the LIHTC program and provides comprehensive real estate corporate banking and capital management services to meet the debt and capital needs of developers and investors. Regions Bank is also a Fannie Mae Delegated Underwriting and Servicing multifamily affordable lender and a Department of Housing and Urban Development Tax Credit Pilot Program multifamily lender.
The terms of the deal, which had been rumored for months, were not disclosed.
“On behalf of First Sterling, we are very excited about our firm becoming part of Regions—we share similar corporate cultures, values, and goals,” said Martin Soja, chairman and CEO of First Sterling.
“We believe our combined commitment to the well-being of our employees and dedication to our developers, investors, and communities are complementary and critical to success,” added Ann Soja, president of First Sterling. “As part of Regions, we will capitalize on our expertise in the acquisition and asset management of affordable housing and grow the firm’s national syndication platforms."
The firm had been looking for the right partner, and Regions Bank proved to be a strong fit, she said. "In addition to having similar goals and values, Regions really appreciated our team and our processes,” said Ann Soja. "It's a $120 billion bank that prioritizes the needs of their customers and employees as well as doing the right thing. It's an honor to be part of a major bank with that culture. First Sterling is now ideally position for future growth in its syndication business."
Bank officials said they will maintain First Sterling’s New York operations and its entire team.
Asked if she and Martin Soja will stay on with the company, Ann Soja said “we’ll be here for a while.” The company will continue to be known as First Sterling.
Regions Bank has been a housing tax credit investor on a direct basis. The acquisition opens up new business opportunities for the bank.
“The ability to originate for distribution is one of the key drivers in Regions’ interest in the First Sterling platform,” said Rob Chiles, managing director, Regions Capital Markets, adding that he’s also excited about bringing the firm’s asset management capabilities to the bank’s portfolio.
Beekman Advisors served as financial adviser to Regions Bank in the transaction, and Deloitte Corporate Finance, LLC served as financial adviser to First Sterling. Alston & Bird served as legal adviser to Regions Bank. Zukerman Gore Brandeis & Crossman served as legal adviser to First Sterling.
Editor's note: The story was updated Oct. 17.