A Beneficial Tie-Up: Delaware Community Investment Corporation Merges With Great Lakes Capital Fund

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The Delaware Community Investment Corporation has merged with Great Lakes Capital Fund in a transaction that will benefit both organizations, which provide debt and equity for affordable housing and community development transactions.

The merger, closed in September, was celebrated October 30 at an event in Wilmington, Del. attended by officials from the two organizations, Delaware Gov. Jack Markell, and others.

Lansing, Mich.-based Great Lakes Capital Fund and its affiliates sponsor regional and state low-income housing tax credit (LIHTC) equity funds, originate loans, allocate new markets tax credits, and provide various services. Its footprint includes Michigan, Illinois, Indiana, Minnesota, Wisconsin, Louisiana, Mississippi, Upstate New York, and – with the merger – Delaware. Delaware Community Investment Corporation (DCIC) provides loans and syndicates housing tax credits for projects in Delaware.

 

New Subsidiary of Great Lakes Capital

“DCIC will now be a subsidiary of Great Lakes Capital Fund, but will retain its name as the Delaware Community Investment Corporation,” Great Lakes Capital Fund President & CEO Mark McDaniel said in a recent interview.

He said Great Lakes Capital Fund (GLCF) will provide its services, systems, and processes to DCIC to enable it to expand and grow. These include underwriting, asset management, investor reporting, and its database.

According to DCIC President Jim Peffley, DCIC decided to merge with GLCF in order to expand its capabilities by improving its infrastructure and by increasing its set of products and services. “Through this relationship” he says, “we’re able to offer more products and services to the customers and communities we serve than we could otherwise.”

Peffley said DCIC can now offer additional loan products, since Great Lakes Capital Fund is an approved Fannie Mae lender and also offers FHA financing products. Until now, DCIC has offered permanent, intermediate, and short-term debt but only through loan funds or loan consortia.

 

Expansion of LIHTC Activity

Peffley said the merger will also enable DCIC to strengthen and expand its LIHTC syndication activity. For example, DCIC plans to come out with a new annual multi-investor LIHTC fund, after not having done one for several years. Recently DCIC has done only private placement LIHTC investments. “We’ve already been in discussions with investors, large and small,” Peffley says, “and there’s strong interest in doing a multi-investor fund here in Delaware.”

GLCF Chief Operating Officer Jim Logue expects Great Lakes to do either a Delaware or a Mid-Atlantic fund, and said there may also be some proprietary fund opportunities with Delaware financial institutions.

Logue said Delaware is an “investor rich market.” According to Peffley, “A lot of banks have a presence here either through credit card companies or other operations located in Delaware. So they all have a CRA (Community Reinvestment Act) need in Delaware.”

In addition, Logue indicated it may be possible to provide Delaware banks with additional opportunities for CRA credit from LIHTC investments and loans made for affordable housing projects in counties outside but bordering Delaware (i.e., Maryland, New Jersey, Pennsylvania). “Under CRA rules there’s some latitude when you have constrained CRA opportunities in a market,” he said.

McDaniel said Great Lakes Capital Fund typically raises between $120 million and $150 million in LIHTC equity each year through its multi-investor and proprietary funds.

Peffley, previously at Fannie Mae and the Delaware State Housing Authority, joined DCIC nearly two years ago. “My charge,” he says, “was to position DCIC to thrive in the future.” As part of this, DCIC began building up its internal infrastructure while receiving advice from Great Lakes Capital Fund on its options. “One conversation led to another,” says Peffley, “and we decided it would make a lot of sense to join up, that we could offer more to our customers and our communities as part of the Great Lakes organization.”