JPMorgan Chase has rolled out a group that aims to originate loans to multifamily affordable and market rate housing developers to be able to finance new types of workforce housing, with plans to scale its new Capital Solutions group to accommodate for the already significant need for affordable housing across the US.
Lionel Lynch, director of CDB Capital Solutions, told Real Estate Capital USA the group is seeking developers and investors which are building projects for individuals and families earning a wider range of incomes than residents in conventional affordable housing projects. The group will also look at projects that provide support to important community facilities.
The group will target projects that are independent from LIHTC equity or other federal subsidies. It will also work with other groups across the firm to expand its client base.
“The genesis of the creation of this group is that we see an incredible need and business opportunity in providing additional forms of affordable and workforce housing to fill the space between what is financed between Low-Income Housing Tax Credits and true market-rate housing,” Lynch said. “We want to be able to finance projects that serve individuals of all incomes to meet what we see as a tremendous need in the community.”
In the past, many of these projects have not been able to get financed by affordable housing tax credits. But as more investors and developers look at the opportunity set in affordable housing, there is greater demand for a wider variety of products, Lynch explained.
“There is a growing recognition and increased desire from investors to invest in this workforce segment of the market and there is also the opportunity for debt that is being able to be underwritten to the new forms of equity that are servicing this market,” Lynch said.
As JPMorgan sees more equity investors entering this market, there is also a greater understanding of what is needed to have an impact on the broader community. “They are seeking sources of debt, people to understand how to make a project successful,” Lynch said.
Although Lynch declined to discuss specific allocations, he noted that JPMorgan Chase has a significant commitment to growing the platform. The bank expects to work with a range of developers, including experienced developers that have a long relationship with JPMorgan Chase and have done other projects within community and development banking.
“We are also working with newer developers. True workforce housing as an asset class is relatively new and we are in no way limited by the current developer base,” Lynch said. “We welcome the creativity and experience of other developers working in the space and developers of color and women who would like to be in this space. We see opportunity to work with developers of color and women who are experienced and talented but haven’t had as much access to capital.”
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