Citi Community Capital has rolled out a $1 billion program, a combined debt and equity fund, to re-engage the low-income housing tax credit (LIHTC) market in a big way.
Half of the fund will target tax credit equity, and the other half will provide construction financing to a market starved for both. The company is actively pursuing deals and has targeted several metro areas across the country, including New York City, Chicago, San Francisco, Washington, D.C., and select markets in Texas and South Florida.
The fund signals a renewed, aggressive approach to the struggling LIHTC market. Citi has always been a big tax credit investor, having pumped a whopping $1.8 billion into LIHTCs in 2007. Last year, however, as the tax credit equity market continued its freefall, the bank only invested about $200 million.
That pace should pick up in a big way this year. “We want to be fully invested by the first quarter of 2010,” said Steven Fayne, a managing director at the community development arm of the New York-based bank.
“We’re out there beating the bushes.”
This new fund is also something of a departure from the way Citi approached the affordable housing market in recent years. In the past, Citi often participated in multi-investor funds, but this new program is entirely Citi’s money.
“We’ve got some targeted investing that we want to do, and the only way to get it done really was to have our own proprietary fund,” said Fayne.
Citi will work with tax credit syndicators National Equity Fund, Raymond James Tax Credit Funds, and The Richman Group Affordable Housing Corp. to buy the credits. The majority of the fund will target 9 percent deals, but the company will also selectively consider 4 percent LIHTC transactions.