Walker & Dunlop is expanding its affordable housing business with the acquisition of Alliant Capital and its affiliates, Alliant Strategic Investments and ADC Communities.
The move will add Alliant’s low-income housing tax credit (LIHTC) syndication capabilities to Walker & Dunlop’s sizable affordable debt financing space.
Alliant was No. 6 in the National Multifamily Housing Council’s list of top syndicators this year and has participated in the development of more than 100,000 affordable units serving over 400,000 families.
In 2020, the firm closed $386 million in LIHTC capital and acquired 32 properties, according to Affordable Housing Finance’s syndicator survey.
With the overall LIHTC market having an annual volume of about $18 billion, there’s an opportunity to grow Alliant’s market share as part of Walker & Dunlop (NYSE: WD), according to officials.
“Alliant is one of the largest and most respected tax credit syndicators and affordable housing developers in the country. The addition of their people, assets, and capital formation capabilities immediately makes Walker & Dunlop a market leader in affordable housing—lending, sales, and tax credit syndication,” said Walker & Dunlop chairman and CEO Willy Walker. “With Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development all focused on affordable housing and more and more Americans seeking affordable rental housing, the combination of Alliant and Walker & Dunlop is a home run. Shawn Horwitz has built an incredible team and company, and we look forward to welcoming them to Walker & Dunlop."
His firm is one of the nation’s largest commercial real estate lenders. It ranked No. 8 on AHF’s list of top affordable housing lenders this year, providing approximately $2.4 billion to affordable housing deals in 2020.
In addition to Alliant’s ability to syndicate new LIHTC deals, the acquisition opens up the opportunity for debt financing and property sales opportunities from its portfolio to boost Walker & Dunlop’s transaction volume.
Alliant has between 50 and 75 assets per year come out of their “lock up period,” and those assets need to be sold, refinanced, or recapitalized, according Walker.
“Alliant will have an immediate impact on Walker & Dunlop's revenues, adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization], and cash flow,” Walker said. “This acquisition dramatically accelerates the achievement of three Drive to '25 goals: revenue growth to $2 billion, assets under management to over $10 billion, and $60 billion of targeted affordable housing lending. To accomplish so much in one acquisition is a true game-changer for Walker & Dunlop."
Announced last year, Drive to ’25 outlines the firm’s strategy and five-year financial and operational targets.
The firm will acquire Alliant at a total enterprise value of $696 million.This will be comprised of $351 million of cash and assumption of Alliant’s securitized debt facility, which had an outstanding balance of $155 million at July 31; $90 million of Walker & Dunlop stock with the number of shares to be determined at closing; and $100 million of earn-out structured as participating interest in future cash flows over the next four years.
The deal is expected to close in the fourth quarter and is subject to certain regulatory approvals and consents of Alliant's investor and lender partners.
In addition to Alliant’s syndication business, the transaction involves ADC Communities, the firm’s affordable housing development arm, which has financed 29 developments and more than 5,400 units in eight states since 2014, and Alliant Strategic Investments, which focuses on non-LIHTC affordable housing preservation, workforce housing, and Opportunity Zone investments.
"Combining with Walker & Dunlop's scaled lending and sales platform will accelerate Alliant's growth over the coming years,” said Horwitz, Alliant founder and CEO. “Walker & Dunlop's people, brand, and innovative technology will benefit our clients, partners, and investors, and allow us to provide more affordable housing, something that is desperately needed in America."
Headquartered in Woodland Hills, California, Alliant has more than 130 employees. Horwitz and other key members of the senior management team will join Walker & Dunlop and continue their leadership roles, according to officials.
Beekman Advisors represented Alliant as financial advisor in the transaction.