Centerline Capital Group Expands Affordable Housing Debt Team
- Jun 23, 2011
New York–Centerline Capital Group, provider of financial and asset management services for affordable and conventional multifamily housing (and subsidiary of Centerline Holding Company), has hired three affordable housing debt product specialists to expand its affordable housing debt products business.
Philip A. Melton has joined as managing director of affordable housing debt products originations, leading the debt originations team out of the Dallas office. Melton will focus on debt originations, expanding Centerline’s FHA lending volume and exploring other affordable debt opportunities.Karen Dubrosky, in Minneapolis, and Cindy Hannon, in Atlanta, have both joined the team as well. Melton, Dubrosky and Hannon all come from Grandbridge Real Estate Capital, LLC, where they worked together for three years.
Centerline is long established in the affordable housing debt and equity finance markets. Last year the company originated about $115 million in affordable housing loans and raised $120 million in equity to close LIHTC Fund CCP38. Since inception of the LIHTC program in 1986, it has raised over $10 billion in equity. As the affordable housing market rebounds, Centerline is expanding its team to provide owners, investors, and developers with an increasingly diverse array of options in the debt arena.
Melton shares with MHN some insight into Centerline’s new additions.
MHN: What are the factors that have helped affordable housing to reemerge?
Melton: The dynamics of the affordable housing industry were heavily disjointed with the exit of Fannie and Freddie from the market. The resulting absence of capital in the market essentially opened the door for banks and more general investors, including insurance companies and other alternative investors, to enter the market. The yield for tax credits had risen significantly and there were essentially no losses to offset, so affordable housing industry came back into favor with investors that had exited the market when yields had become unattractive. Yields have dropped from the highs of 2010 and are beginning to stabilize in the marketplace, although, with bank CRA needs increasing, yields have begun to decline steadily in the past six months.
MHN: What makes Centerline interested in increasing focus on affordable housing?
Melton: Centerline has had a strong commitment to the affordable housing industry for more than 20 years and is focused on it now more than ever. We see economic benefits associated with being in the affordable housing market both on the debt and equity side. It is an area that has historically had very low loss percentages primarily because of the strict underwriting criteria that is employed. We view affordable housing as a good utilization of Centerline’s capital.
We are currently expanding our team in direct response to the state of the economy. We see a rather large disparity between people in different income classes. For example, workforce housing has become much scarcer as there has not been a lot of new construction over the last few years. This has resulted in an urgent need for affordable housing in high-cost areas such as Washington, D.C., New York, and Southern and Northern California.
MHN: What tools and services will the company now be able to offer with this expanded team?
Melton: Centerline’s newly expanded team, and commitment of resources, can execute on a wide range of multifamily financing products, including conventional debt, affordable equity and asset management. We are a Fannie Mae DUS lender, Freddie Mac seller-servicer and an FHA-approved mortgage provider. The team can also offer bridge lending and non-agency permanent financing through C-III Capital Partners.
Our new team is comprised of a diverse group of affordable housing professionals with a wide range of finance, investment banking and affordable housing development backgrounds, greatly expanding Centerline’s capabilities, depth and geographic coverage.