community lending & investment presentation -...
TRANSCRIPT
Community Lending & Investment
Presented to: NYSAFAH
Presentation by Page Travelstead
May 13, 2014
Confidential – For Discussion & General Information Purposes Only
Wells Fargo Community Lending and Investment
As of October 2012
Community Lending and Investment (CLI)
New York
Washington, D.C.
San Francisco
Seattle
San Diego
Minneapolis
Los Angeles
Dallas
Philadelphia
Atlanta
Charlotte
Fort Lauderdale
Richmond
Portland
Boston
Irvine
Denver
Salt Lake City
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2013 Commercial real estate/multifamily total originations by property type
Affordable housing
Source: MBA Commercial Real Estate/Multifamily Finance Firms Annual Origination Volumes Year ending December 31, 2013
$ amounts in millions
Rank Company Name Amount Number of Deals
Average Size
1 Wells Fargo $2,027 223 $9.1
2 PNC Real Estate $1,022 136 $7.5
3 J.P. Morgan Chase & Company $900 94 $9.6
4 Oak Grove Capital $884 87 $10.2
5 Greystone $544 123 $4.4
Products
We provide custom solutions for projects that don’t have access to traditional financing in order to help our communities gain access to the marketplace and create true, sustainable economic development.
Short-term Construction Lending
New Markets Tax Credit Products
Balance Sheet Loan Program
Equity Investments
LIHTC Direct Equity Investments
LIHTC Fund Investments
Equity Equivalent Investments
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Product Types
Purpose
Deliver short-term construction financing that provides affordable housing which helps community
redevelopment and revitalization efforts, making housing more affordable.
Transaction structure
Typical Loan size: $5 - $80 million and over
Short-term, balance sheet lending
Construction/bridge loans, acquisition and rehabilitation, letter of credit, credit enhancement, lines of
credit
Non-profits, for-profit or public developers of affordable housing projects nationwide
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Short-term Construction Lending
Purpose
Make high-impact loans and investments in underserved communities through NMTC allocations, creating jobs and millions of square feet of mixed-use, commercial and community-oriented space nationwide.
Transaction structure
Wells Fargo acts as an investor or leveraged lender and also invests in third-party Community Development Entities (CDEs)
Structured as senior or subordinated debt and are typically collateralized by real estate or business assets
Maturities are generally seven years, but may extend beyond that
Target market
Non-profits, small and middle-market businesses, and real estate redevelopment
Properties located in areas of higher distress targeted by local governments
Eligible businesses
Community facilities
Charter schools, child care centers, healthcare clinics, community and performing arts centers
Job creation and small business finance
Owner-occupied facilities finance, expansion capital
High-impact real estate development
Redevelopment projects, mixed-use and transit-oriented developments, neighborhood-serving retail
Performance
Second most active investor since program inception
Portfolio of 112+ investments totaling $1+ billion in AUM
National platform with regional offices in San Diego, San Francisco, Washington DC, and Charlotte
Remain a principally CRA-motivated investor but will do deals out-of-market for relationship reasons and profile building
Second largest and most consistent bank recipient of NMTC allocation since program inception
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New Markets Tax Credits (NMTC)
Purpose
Available for 9% and 4% LIHTC projects in which Wells Fargo provides the equity and/or construction
loan. Loans remain on balance sheet or pre-sold to strategic partners at conversion.
General Terms
Forward Commitment Term: Up to 30 months from construction loan closing
Loan term: Up to 30 years with NYCRS PPAR program, 18 years on Balance sheet loans.
LTV: Maximum 80%
DSC: 1.20x
Forward commitment: $2 million to $25 million
Prepayment: Yield maintenance or 1% fee
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Balance Sheet Loan Program
Purpose
Invest equity directly in partnerships formed to construct or rehabilitate affordable housing through the
purchase of tax credits.
Experienced non-profit and for-profit real estate developers specializing in LIHTC deals
LIHTC or LIHTC and Historical Tax Credits
Collaborate closely with the construction and permanent loan arms of CLI
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Direct Equity Investments
Purpose
Invest equity in LIHTC funds managed by third-party syndicators that support development of affordable
housing.
Proprietary fund targeted investments
Experienced and well-established non-profit and for-profit developers
Annual investments of $100 - $200 million
Funds must be placed in a Wells Fargo account
Goal is to pair each investment in a proprietary fund with Wells Fargo construction and/or permanent
financing
Multi-investor fund targeted investments
Non-profit and for-profit developers
National and regional funds
Annual investments of $300 - $400 million
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Fund Investments
Purpose
Debt & equity for nonprofit loan funds & housing developers
Equity Equivalent Investments (EQ2s) – 5 to 10 year unsecured subordinate debt priced
substantially below market
Senior debt for loan funds (CDFIs) – up to 5 years in term, secured and unsecured financing
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Equity Equivalent Investments (“EQ2’s”)
Gateway Elton II
Hudson Companies/Related Retail/CAMBA Spring Creek section of East New York, Brooklyn, New York
$30,618,000 Standby Letter of Credit
$24,100,000 Direct Equity Investment
WFB CLI provided a joint Debt and Equity execution to provide a direct LIHTC Equity investment and Standby LC to back the tax exempt bonds issued by NYC Housing Development Corporation (HDC) along with $18.5MM in City subsidies. Gateway Elton II consists of three 6-7 story buildings with a total of 175 units in a 100% Low-income project financed through HDC’s LAMP program. The project is part of the Gateway Estates project, and the greater Spring Creek urban renewal area, and is the second of three phases being developed by Hudson Companies and Related.
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Recent Transactions
City Point Tower 1
BFC Partners/Acadia Realty Trust Downtown Brooklyn, New York
$62,000,000 Direct Purchase Facility
WFB CLI provided a Direct Purchase facility to purchase $62MM in recycled tax exempt bonds issued by the NYC Housing Development Corporation (HDC) along with $19MM in City subsidies. Tower 1 is a 19 story, 251-unit mixed-income building with 20% low income, 30% middle income and 50% market rate units pursuant to HDC’s 50/30/20 program.
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Recent transactions
Construction Lending
Page Travelstead
(212) 214-7344
Duane Mutti
(212) 214-7341
Equity Investments
Korbin Heiss
(212) 214-7348
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Contacts
Or learn more about how we can work with you to help rebuild communities, by visiting wellsfargo.com/communitylendingandinvestment