A Conversation with Dudley Benoit, Executive Vice President, Alliant Capital

Benoit describes himself as a “New Jersey guy through and through,” relocating to Los Angeles two years ago for Alliant. Prior to joining Alliant, Benoit worked at Santander Bank as a senior vice president and director of community development finance, and held senior management positions at JPMorgan Chase in the commercial real estate multifamily lending, community development banking and the New Markets Tax Credit (NMTC) units.

In an interview with Tax Credit Advisor, Benoit spoke about his career, what Walker & Dunlop’s acquisition means for the company, as well as industry trends and challenges.

Tax Credit Advisor: When you started your college career at Rutgers, were you planning on going into public policy?

Dudley Benoit: I was going to be like everyone else. I was going to be a lawyer. I avoided math like the plague, funny that I’m in finance now. I figured I’d be a political science major because I wanted to go to law school, and thought, “So, how do I get good grades? I like to talk, so I’ll do political science. I can write papers and not have to do math.”

TCA: You mention always being interested in urban areas, but how did that really move into community investment work?

DB: When I was at Michigan, one of my advisors, Sheldon Danziger, put me in touch with folks at MDRC. MDRC is a research firm based in Manhattan that studies poverty, urban areas, education and welfare. I started working there. I did an internship then I worked there for a couple of years.

The summer between my senior year and starting graduate school, I had an internship at Chase Community Development Corporation. I started hounding those folks to hire me. When I graduated, they finally gave me an entry-level analyst job.

When I thought about the kind of work I was interested in, I thought, “Capital is a big part of this. Let me figure out how capital works in this.” What’s the easiest way to understand capital? Go work for a bank. That’s all the thought I gave to it. I ended up spending 16 years at JP Morgan, through nine mergers or so, and just going through different roles, running different parts of the business. I also did commercial real estate, but I spent most of my time in community development. So that’s kind of been my life’s work, if you will.

When I left the bank in 2015, I went over to Santander to help them reestablish their community development lending and investing platform.

TCA: What are some things that are important to you, outside of your job?

DB: I love being around family and friends. That’s the one thing about moving out here [Los Angeles] we’ve missed. Because I lived in Jersey City right outside Manhattan and when I walked out of my brownstone there are a million people on your block, kids running in and out of each other’s houses. So, family and friends are huge. I’m a huge music lover, jazz in particular and also R&B. I used to DJ for a long time, so I have a ton of vinyl at my house and turntables and all that stuff.

TCA: What are your goals, career or otherwise, and where do you see yourself going?

DB: My goal is always trying to help build out a platform, build up people, support them and put them in the right position to be successful. That’s what I think of my job, even though technically I’m head of our production. My team is responsible for investor relations, which includes raising capital and originations, going out there and finding transactions that we sell to our investors. We have great, capable people doing that. I think more of myself as trying to help build the infrastructure to keep building the team, building the business and keeping this successful.

TCA: Do you have any personal metrics that you use to measure yourself as you’ve moved through your career? 

DB: I don’t, and I say that because I could not have imagined where I am today. Not like I’m some superstar, but I’m a son of a single mom; a Haitian immigrant with a 10th grade education, who came to this country just wanting to give her kids a better life. Unfortunately, my mom passed years ago, but we far exceeded that basic immigrant story, that first generation immigrant stuff and built a life for my family, my kids.

Especially given what we’ve been going through the last 18 months, I’m looking at everything on a daily basis and feeling extremely grateful, but not trying to think about what’s the next thing. I’m trying to really live in the present saying, “Well, what we have now is amazing, how do we take advantage of it and grow it and make sure we’re being good stewards of what we have?”

TCA: How does Walker & Dunlop’s acquisition of Alliant affect how you’ll do business going forward? 

DB: I think it’s going to affect us in a positive way. I think one of the things that’s great about their platform is they’re big, but not huge.

I think there’s a lot of technology they have that will be better for us. They have processes that are probably stronger. They have an institutional might about them that we can adopt and help us think about how we build the company and build it out.

What I liked about them from day one when I met them and we worked on announcing the transaction is they are not the kind of folks that walk into a room and think they’re the smartest people there, although they’re very smart people. They come into a room saying, “Look, you guys have a business expertise and knowledge space that we do not have. We want to have that be complementary. So, how do we support you in growing your business?”

I think that’s going to be the effect. They’re going to come and help us grow our business, and obviously their balance sheet is going to help us. There are things they can do that we couldn’t do as a small, independent firm, but they also have access to a different a set of clients that we probably didn’t have access to and vice versa.

TCA: Alliant was considered pretty big in the market, ranked sixth. How do you think this acquisition will affect the industry?

DB: I think it’s going to probably help us move a few more rungs up the leader board. It’s funny because our world is a very small world. If you go to the industry conferences, it’s the same people that have been doing this for 30 years. People may change seats, but they don’t typically leave the industry. Folks really like what we do, and we’re usually a destination for folks versus just a pit stop.

As an industry, we’re trying to target investors that are interested in ESG and impact investing to really look at investing in affordable housing because this is, in this country, probably the original impact investing, the original ESG, but it’s not viewed that way by a lot of people. In a bigger conversation, some others may have with you is this understanding of what is ESG because ESG is kind of in the eye of the beholder. So, it’s not clear what everyone wants, but I think that’s a potential way of growing the investor base because we really want to do that.

Until we do that, the investor base is relatively static. So, it’s not like we’re going to have a new flood of money coming in for this. We’re going to have to be leaner and try to be more focused on what we do. So, I think down the road, unless the investor base really grows, there probably will be a little bit more consolidation.

TCA: How do you think the acquisition will affect the day-to-day business at Alliant, including your role? 

DB: Already, it’s been great. I think we are already getting an opportunity to see more transactions and working on synergies. I think ever since it’s been announced, that’s what I’ve been spending most of my days on and talking with my colleagues at Walker & Dunlop about – joint opportunities, things that we’re seeing, how can we do this together, how can we go out and figure out ways to pitch to new clients together.

Our focus is going to be, over the next year or so, about really trying to figure out how do we operate together—joint client calling and joint pitching the products—because our client bases are similar, but they’re looking for different things from different sides of it. So how do we bring that together and be able to present a single opportunity when it’s necessary? It’s not always going to be available. Sometimes they just need equity. Sometimes they just need debt, but we want to be able to leverage that to broker relationships.

On a day-to-day basis, what we do here on the equity side isn’t really going to change. That was one of the things they said when they came to us, “You do your business well. We just want to understand how we interact with you and complement you more,” versus coming in and saying, “Well, let’s start all over. Let’s do new processes, new procedures.”

TCA: A press release announcing the acquisition, Walker & Dunlop notes the acquisition’s impact on its Drive to ‘25 Goal. Were there any specific goals or targets at Alliant that this acquisition would help you all achieve?

DB: Yeah, it’s funny you mentioned that because before I was told about that, we were in the process of creating our own Drive to ‘25 kind of goals as well. I think what we’ve done over the last ten years, we’ve doubled our book and that’s what we were trying to figure out for the next five years. Is there any way to double what we’re doing? So, we hadn’t formally done that yet and put that pen to paper, but that’s what we look at. How can we double our production in the next five years? We hope that being with Walker & Dunlop will really help us get there. 

TCA: The budget reconciliation bill that’s working through Congress and that would include, potentially, changes in the tax rates and additional credits. What does that mean for you all in the marketplace? 

DB: Well, clearly, the more credits you give, the more subsidies, the more you can create affordable housing. That’s a win-win for all of us, obviously. If the tax rate goes up, investors will have a greater appetite for that. So again, for us that’s a positive, and I think for developers and our communities, that’s a positive. And then, some of the other tweaks in there are going to be phased in over time because we don’t want to create a glut in the market of credits. As I said before, it’s not like our investor base is going to grow automatically overnight once these things happen. So, I think folks that have crafted these legislations, and a lot of the work that the industry groups have done, like the Affordable Housing Tax Credit Coalition, has been great. I think overall, it’s going to be a positive and will allow us to build more for a while.

TCA: As far as easing into it, the concern would be if there is an increase in available credits that pass, would there be enough investor demand for those credits?

DB: Yeah, I think that’s right. I think a lot of folks, maybe some on the development side, are expecting that pricing is going to go up. Unfortunately, I think pricing will probably stay the same just for that very reason because it’s not like we have a whole bunch of other investors coming in that will create this competition to drive the prices up. But I do feel as the legislation is currently written, phasing in some of the benefits is going to make it easier for the industry to absorb it over time.

TCA: In the regulatory space, if you had to rank some of the issues that you’re keeping your eye on, what are you looking at?

DB: The biggest issue affecting our industry now is the average income test. Earlier this year, Treasury set out some guidance that turned the whole industry’s assumptions on its head and essentially made the average income test untenable for us to use because it proposed and introduced too much risk of recapture.

For us, as an industry, that’s our biggest issue. We’ve been asking Treasury to clarify the rules because of what they’ve done unintentionally. I think there’s been conversations. They understand the unintentional effect – they essentially shut down the average income test being used because investors are not willing to take a full recapture risk based on the interpretation they put out.

I think that’s probably our number one with a bullet; we’d like Treasury to clear that up so we can go back. From a public policy perspective, everyone across the board agrees that is a good rule, that we need to encourage that, but the way they’ve written the guidance makes it almost impossible for investors to get comfortable with.