Freddie Mac, which re-entered the Low-Income Housing Tax Credit market last year after nearly 10 years away, is partnering with RBC to provide more than $180 million for affordable rental housing.
Freddie Mac announced Tuesday that it closed a LIHTC Fund with RBC Capital Markets’ Tax Credit Equity Group. Investments from the fund have already begun, the government-sponsored enterprise said.
The investment marks Freddie Mac’s fourth LIHTC venture in the last few months. Back in November, Freddie Mac inked a similar deal with Boston Financial Investment Management.
According to Freddie Mac, the RBC fund will focus on transactions in areas that have been underserved over the past decade, such as rural communities; 4% LIHTC financing; and developments that provide intensive supportive services for their residents.
The fund will also invest in supportive housing for special needs populations and housing in areas affected by disasters.
The fund, which will provide more than $180 million for affordable rental housing, has already closed 10 transactions, including two in Puerto Rico and eight more in five states: New York, South Carolina, Tennessee, Texas, and West Virginia.
According to Freddie Mac, the investments in Puerto Rico will go to areas that were “devastated” by the hurricanes of 2017. Freddie Mac said that both investments will help build the José Gautier Benítez mixed-finance communities, which will be built on the site of a demolished public housing development.
The development’s 238-unit family phase will receive a $37.5 million LIHTC equity investment, while the 200-unit senior phase will receive a $28.9 million investment.
The development will also be 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 power outage.
“We are proud to partner with RBCCM as a LIHTC syndicator. Our fund will provide stability to underserved markets and deliver equity capital for affordable housing to communities across the United States,” said David Leopold, vice president of Targeted Affordable Sales & 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,” Leopold added. "Among its many important investments, our fund with RBCCM is helping to build housing that is both affordable and resilient to future storms.”
Eric Moody, managing director at RBC Capital Markets, said the firm is “honored” to be partnering with Freddie Mac on the affordable housing effort.
“Investors have been reluctant to return to Puerto Rico following the hurricanes of 2017, and Freddie Mac’s investment epitomizes their commitment to add liquidity to the LIHTC market to ensure much needed housing is delivered in underserved areas,” Moody said.
“RBCCM is pleased to have leveraged its longstanding partnership with McCormack Baron Salazar and their significant experience with local government partners in multi-phased, mixed-income developments on these new investments,” Moody added. “Their work with the Puerto Rico Department of Housing will result in the delivery of over 438 units of high-quality, storm-resilient housing to the residents of Caguas.”