Key to a Successful Property Closing:
Early Contact with Your Syndicator

As recently as last year, placing deals with investors was the easy part, while meeting the developer’s needs remained challenging. Nowadays, amidst the turmoil in the tax credit investor market, syndicators are charged with aligning investor interest with developer needs to successfully place and fund tax credit developments with investors. How can developers survive in today’s shifting market? A key element for a successful closing today is to contact your syndicator/originator as early as possible.

In the past it was assumed there would always be a willing investor for each tax credit project. But now that many investors have cut back their investment activity or even left the market completely, predictable closings necessitate identifying an investor early in the process.

What makes a property attractive to investors? In today’s environment city size, partnership losses, hard debt to total cost ratio, hard closing dates, guarantees, reserves and developer’s experience are of utmost importance when presenting potential investments. “Investors are looking for projects which are in larger metropolitan areas and are shying away from highly leveraged — and therefore loss heavy — bond deals. Deal simplicity (100% low-income units) and developer flexibility in the timing of project closings are also two critical elements for virtually all investments going forward. Of course, developer experience and financial strength to back the project are also heavily considered,” remarked WNC Vice President – Originations for the Western Region, Jeff Butcher.

What can developers expect? Successful deals in the current marketplace will have to adapt to the changing terms required by the investment community; early communication, flexibility, adaptability in tax credit pricing, stronger reserves and guarantees as well as lower cash flow and back-end participation are all possibilities.

Finding an investor to marry a project to takes time. Investors will be looking at not only the above project/developer characteristics but also other factors which meet their specific requirements. Today, more than ever, contacting your WNC originator early on in your planning process will help to insure a smooth closing.

Do you have a property you would like WNC to consider? Contact WNC now!

Darrick Metz – Central states: 888-798-0557
Jeff Butcher – Western states: 800-286-1135, x108
Darryl Seavey – Eastern states: 212-370-4082

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