The deal to finance 55 apartments for low-income families at Clinton Commons closed without a hitch.
“That’s unheard of,” says Peter Poon, CFO of Resources for Community Development (RCD), an affordable housing developer based in Berkeley, Calif. Usually, he says, some questions arise between the construction lender and the equity provider.
This time was different. Union Bank handled the equity and the debt for the Clinton Commons deal, and the terms for both were negotiated by the same banker: William “Terce” Sandifer, senior vice president and originations manager.
“Every other lender and investor capable of providing both run it through different parts of their organization,” says Poon. “You deal with two different groups with two different sets of attorneys.”
Sandifer is a leader at Union Bank in part because of his focus on finding solutions to this kind of inefficiency.
“Those who have the opportunity to work with Terce recognize his skill in observation, his challenge of conventional thinking, and his commonsense approach to problem-solving,” says Union Bank Senior Vice President Annette Billingsley. She leads the Community Development Finance division, which Sandifer joined in 2002.
He also works hard, according to customers like Poon, to help affordable housing developers close deals. These relationships are especially important in difficult times, according to Sandifer. “Walking away from deals or re-trading prices, that is something that we have never done,” he says.
During the financial crisis, Sandifer and his colleagues at Union Bank stood by RCD as the developer struggled to close some difficult transactions—even negotiating with other financing providers to keep deals alive. “This is something that I will always remember them for,” says Poon.
Sandifer first began packaging debt and equity investments together for developers during the financial crisis, when deals needed all the help that they could get to arrive at the closing table. Until then, there had been a deep divide between the part of the bank that invested equity in low-income housing tax credits and the other part of the bank that offered construction loans—even though many developments already received both debt and equity from Union Bank.
During the financial crisis, equity pricing is probably the factor that caused the most trouble—but the industry standard practice was that equity terms were negotiated after the construction loan. Negotiating these terms together sometimes allows Union Bank to offer slightly higher equity pricing in exchange for tougher terms on the construction loan. Sometimes that makes a difference between success and failure for a deal.
“It seemed more efficient if one banker could structure both sides of the transaction,” says Sandifer.
Combining the negotiations for debt and equity also saves time and can cut down on confusion. When different parts of the bank handled debt and equity, often these bank officers would have different ideas about how to underwrite a project and would sometimes take issue with one other. “When you have a single partner to work with, the offers from the two sides dovetail together so that they work,” says Poon.