By Jeffrey Steele, Contributing Writer
Irvine, Calif.—Noting it has continued to experience strong demand from both existing and new investors, WNC, a national investor in community renewal and affordable housing projects, has closed WNC Institutional Tax Credit Fund X, California Series 10. The $50 million multi-investor Low Income Housing Tax Credit (LIHTC) fund will finance eight affordable housing projects.
WNC has now closed a California affordable housing fund in10 consecutive years. The company attributes its long experience in the affordable housing business, its relationships with top affordable housing developers and the strength of the market for that decade-long run.
“Being in business for 40 years is a big component of our success,” Will Cooper, Jr., CEO and president of WNC, tells MNH. “But performance is just as important. We’ve acquired more than 230 properties in California, and have built long-term relationships with some of the most experienced California developers. Our investors include local, state and national banks, as well as large insurance companies . . . Our investors want to know their investments will perform, and developers want to know we can deliver equity to their projects reliably. It is WNC’s consistent performance year after year in our industry that we believe gives us a competitive advantage.”
Developers are the single most critical component of WNC’s success, Cooper adds. “If our developers are successful, we are successful,” he says. “It‘s that simple. Aligning ourselves with the best developers in the state has always been an objective of WNC, and dates back to the 1970s and ’80s.”
As a result of investing in 45 states, WNC also has a thorough understanding of markets throughout the country, Cooper reports. In WNC’s view, the major California markets rank among the best markets in the country for affordable housing, and are on a par with the New York City metropolitan area, he says.
Each of the fund’s octet of properties was chosen based on WNC’s underwriting guidelines, largely focused on real estate fundamentals and the strength of the sponsor or developer, Cooper says.
“We look closely at the condition of the overall rental market, with an eye toward how much of a discount to market rents we will receive, and the overall capture rate for the project,” he reports. “We look for developers that have worked in the affordable housing industry for a minimum of five years. However, most of our developers have been active for more than 20 years. Many of our developers are second-generation companies, just like WNC.”
Nearly all the investors in WNC’s California funds are banks, including local, state and national banks, Cooper says. WNC’s California funds have raised a total of $328 million from 21 such institutions, most of which have invested in multiple California funds.
What’s ahead for WNC? Cooper says the company has grown for many years as a result of zeroing in on its core business, while also diversifying into newer business channels that include commercial real estate through the New Markets Tax Credit program. Recapitalizing and rehabilitating its older portfolio, which WNC defines as preservation, has also delivered success.
“We expect continued growth in each of these areas,” Cooper says.
“Beyond this, we are looking at getting into more traditional income and growth-oriented investment opportunities, while staying focused on rental housing.”