Comunidad Partners is rolling out a new credit platform to increase its affordable housing lending bandwidth and is looking for additional scale through partnerships.
Comunidad Credit Capital will open its doors in Spring 2023 and the Austin, Texas-based real estate investment manager wants to scale the platform relatively quickly and take advantage of the current opportunity set it is seeing within the affordable housing sector.
Debby Jenkins – who previously spent 14 years at Freddie Mac – is at the helm of C3 as its CEO and partner. Jenkins told Real Estate Capital USA that while firms and government sponsored entities have seen some success when addressing the demand for affordable housing, to date the market has not seen a comprehensive debt strategy that encompasses both rent preservation and Impact solutions and services.
“We want to be able to scale relatively quickly and take advantage of the opportunity,” Jenkins said.
She noted a primary consideration C3 is accounting for is the estimated $35 billion of multifamily debt set to mature in 2023 within government sponsored enterprise books, commercial mortgage-backed securities deals and other forms. Across the commercial real estate debt landscape, such a focus on refinancing and imminent debt has at times stymied new origination activity be it for acquisitions or construction.
Jenkins said a key priority for C3 will be finding a lending entity who can help the firm scale and work through various structures of the products it wants to provide. “It takes a while to actually form a platform from ground zero,” she said. “We are in the process of forming partnerships and our capital structure in a way that we can build capacity and scale more quickly.”
Optimal partner parameters include companies familiar with the GSE platforms and multiple pockets of capital to either invest in the platform or invest in infrastructure and services to help C3 gain traction.
One such product Comunidad has found momentum with in the affordable housing sector is Freddie Mac’s Tenant Advance Commitment program, or TAC.
Antonio Marquez, Comunidad Partners founder and managing partner, said the TAC found its genesis as a means of creating more workforce housing at a wider scope while also ensuring affordability remained in place through and beyond the life of the financing.
Comunidad was the first company to use the structure in 2021. Using the TAC requires financiers to self-impose rent restrictions running concurrent to the loan terms and provide social impact services to residents of the assets.
Comunidad formally re-upped its usage of the TAC structure with Freddie Mac through a fresh $400 million commitment secured at the end of January this year.
Marquez explained Comunidad invests in a varying degree of affordability depending on property and market characteristics. While the percentage of units can vary, the goal is to maintain rents at levels attainable to workforce residents.
“That’s a big part of our strategy as well. It’s not step-stratified on one end or the other, but really a good balance from an income perspective,” Marquez said. “So even the folks that are at a little bit lower income level have neighbors in high opportunity areas and that gives them better access to jobs and healthcare and other tools and amenities that folks in a higher income bracket have as well.”
Comunidad-backed social services through its TAC have included after-school programs, virtual healthcare services and credit and wealth-building programs to bolster the existing resident base with tangible benefits.
The firm is one of a growing number of multifamily-steeped financiers who are grappling with how to create and maintain more affordable housing stock at a time when there is an estimated 4 million-unit gap across the US.