Tax Credit Syndication

I have an upcoming interview with an investment bank for an acquisitions analyst position doing LIHTC Syndication. I don't have much experience in LIHTC but they get a lot of deal flow based on my research. I am wondering what type of technical questions I can expect. I am also concerned about getting branded as a LIHTC guy but it seems as if syndication won't pigeon hole me as much as development would. Is this correct? Any help would be appreciated. Thanks.

 
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Syndication is a good place to start and won't pigeon hole you too much. They'll expect you to be able to build out a simple proeprty level proforma with some debt build in. I doubt they expect you to know too much about affordable housing . Do a little research on section 42/LIHTCs ahead of time so you can ask them some decent questions.

I worked in acquisitions for a syndicator for a few years. PM me if you have more specific questions.

 

Thinking about taking an underwriting role at one of the bigger tax credit syndicators.(think Raymond James, AIG, National Equity Fund) Anyone have thoughts about underwriting role in LIHTC tax credit syndication? Other than origination or asset management, what are some places this role could set me up for?

 

I've been in LIHTC syndication for the past 6 years, and underwriting deals for the past 3.5 years. Underwriting is good experience, and you will get a lot deal exposure which is what matters in real estate. However, it can be a real grind between managing due diligence checklists, chasing down diligence from incompetent and/or lazy developers, managing third parties and correcting their mistakes, etc. There is a lot of babysitting involved. This also doesn't include the part of your job where you are actually writing up the deal, analyzing financials, the market, and managing financial projections. Hours are good, compensation is good, I'm just a little tired of the grunt work so will probably be moving on soon. 

I don't think you'll have an issue switching to a different role after underwriting for a few years. People go to the development side, more senior roles in acquisitions, commercial lending, etc. The issue may be, that you realize you will get paid the most if you stay in LIHTC given that it requires a certain level of knowledge/expertise, and therefore it may not make sense to switch to a different asset class. 

 

Thank you for insight. The way you describe the role reminds me of the type of responsibilities I have as a development manager currently lol. Except I have little upside at my current shop. Do you know what the compensation potential would be if I went on to be an originator on tax syndication side? Would those responsibilities dissipate as you came more senior or move on to originations? Have you seen anyone move on to ESG/Impact investing from tax syndication underwriting roles? What are you thinking as a potential exit opportunity from tax syndication underwriting?

 

Not sure as far as originator comp, but I'm guessing it could be fairly substantial (at least $300k +) if you're bringing in big, profitable deals. That will definitely depend on the specific firm though, because from what I've seen the originator role could vary widely. Some originators just bring deals in and hand them off (purely sales), while others stay with the deal and are responsible for overseeing negotiations, dealing with investors, and bringing the various financing parties together. The grunt work definitely dissipates as you move up and it becomes more of an oversight/validation of the underwriting. I think the natural next step is to be running your own deals and managing the overall deal process, rather than trying to figure out why a developer is budgeting $xxx in maintenance expenses. Whether that's on the equity side, debt side, or development side depends on where you want to go. 

 

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