Walker & Dunlop Closes $240M LIHTC Investment Fund
Most of the fund's development partners are among the firm's repeat clients.
Walker & Dunlop has closed Fund 124, a $240 million, multi-investor low-income housing tax credit investment fund. The goal of the fund is to facilitate affordable housing development in 15 separate U.S. markets.
Fund 124 will support development of 1,701 affordable housing units in 18 properties spread across California, Texas, Maryland, Utah, Missouri, Michigan, Connecticut, Florida, Idaho and Kansas. 62 percent of the fund’s developer partners are repeat Walker & Dunlop clients. The fund maintains a weighted average hard debt leverage ratio of 32 percent as a percentage of hard debt to total development costs, ensuring a balanced capital structure supporting long-term stability.
Forty-four percent of the units in the fund’s properties will be subsidized with project-based Section 8 contracts, ensuring long-term affordability for residents.
In the process of developing these properties, approximately 4,542 jobs will be created, and an estimated $898 million in economic impact will be generated to fortify area economies and communities. Community-based activities for residents, such as after-school programs, financial literacy courses and meal programs will also be created by the fund. Additionally, it will also prioritize inclusive housing for adults 55 and older, low-income individuals and those needing subsidized housing. Dedicated equity will support formerly homeless residents and special-needs individuals.
Not without its challenges
“The most significant challenge in closing the fund “stemmed from uncertainty at both the macroeconomic and policy levels,” Ed Jenkins, senior director at Walker & Dunlop’s Affordable Equity group told Multi-Housing News.
READ ALSO: Economic Fears Persist at Latest Fed Meeting
“Market uncertainty and concerns over inflation (and) rising interest rates led to fund yield changes, allowing WDAE to meet our investors’ needs. Simultaneously, proposed policy changes and public commentary – particularly regarding affordable housing including Section 8 – created a pause in investment,” Jenkins added. “As a result, some prospective investors chose to delay potential investments until there was greater regulatory clarity, impacting overall fundraising momentum.”
Needed transparency
“WDAE leaned into the strength of our long-standing relationships,” Caitlin Crowe, a senior director at WDAE told Multi-Housing News. “These trusted partnerships allowed WDAE to maintain alignment and open communication, even amid uncertainty. Additionally, WDAE conducted detailed analysis to assess potential Section 8 policy impacts and proactively share our insight with investors, providing the transparency and confidence needed to move forward and close the fund successfully.”
The affordable housing investment space continues to see nine-figure investment closings. Two weeks ago, PNC closed its LIHTC Fund 98, a $208 million intended to finance the development or rehabilitation of more than 2,000 affordable units. Two months ago, WNC closed its $228 million National Tax Credit Fund, which to date has supported the development and preservation of 26 affordable communities.
