NeighborWorks Capital, a national non-profit Community Development Financial Institution (CDFI), has partnered with National Equity Fund (NEF), a leading non-profit multifamily, affordable, real estate investment manager, to launch the NeighborWorks Capital Equity Fund.
“The idea to create a LIHTC fund for NeighborWorks organizations came from my time leading a syndication business,” said Jim Peffley, CEO of NeighborWorks Capital. “The capital marketplace is not always equitable, and that is certainly true for the LIHTC market. Because syndicators and investors need to secure large numbers of transactions in a competitive environment, they often prioritize large developers. Large developers with a significant pipeline have more leverage with investors, and as a result, they often demand and receive better terms. I saw this happen year after year. Most non-profit developers do not have the scale to have that market leverage, and as a result, they often do not receive the best available terms.”
While the fund is a new option for in-network organizations, NEF is not a new partner to NeighborWorks America, having worked with 76 NeighborWorks members to deploy more than $2 billion in equity for the creation of nearly 350 developments across the country, which resulted in approximately 20,000 units of affordable housing. Now, organizations within the network will receive consistent terms for LIHTC developments, including NEF’s favorable exit terms that preserve affordability and protect against potential challenges in retaining their development at the end of the compliance period.
“At National Equity Fund, we are committed to finding innovative, collaborative financial solutions that help us expand the creation and preservation of affordable housing,” said Matt Reilein, president and CEO of NEF. “Our decades of experience working with partners of all sizes has helped us understand that there can be different experiences in terms of navigating LIHTC processes, terms and resources depending on the size and tenure of a developer. The NeighborWorks Capital Equity Fund allows us to provide partner organizations with LIHTC terms that will positively impact the development of more affordable housing across the country for families in need.”
In addition to equitable terms, the NeighborWorks Capital Equity Fund will allow network organizations to recognize efficiencies including savings on legal fees and time spent on negotiating investment agreements.
“This fund changes that dynamic for members of the NeighborWorks network,” said Peffley. “NeighborWorks organizations are true community-based organizations that advance the priorities of residents. These organizations and the communities they serve deserve the best available LIHTC terms. Collectively, NeighborWorks organizations produce more affordable rental housing than any other developer. This partnership with National Equity Fund gives these critical non-profits the stature they deserve in the marketplace.”
“This is an incredible opportunity to empower a non-profit network to drive deeper impact in communities that have historically been under-banked and under-served,” said Liz Hibbard, Managing Director – Innovation and Strategic Growth at NEF. “Now, we can offer mission forward partners equitable terms and enhanced transparency all while furthering our mission and vision that all individuals and families have access to safe, stable affordable housing.”
