National Equity Fund

A Letter from the CEO

April 10, 2024

April 10, 2024

We couldn’t have anticipated the perfect storm of challenges that would be thrown at our industry, and our business this year. Higher interest rates, skyrocketing insurance premiums, construction delays, reduced housing inventory, record rent increases, looming government shutdowns and more, it would have been easy to be discouraged and distracted. But in fact, we were just the opposite. 

2023 proved to be one of the strongest in NEF’s history across most measures both quantitively and qualitatively. The strength and talent of our NEF team, coupled with our deep relationships with sponsors and investors have carried us through. We’ve demonstrated time and again that we are here for our clients in good times and in bad, and we’ve shown the creativity, grit and confidence necessary to honor our unwavering commitment to creating and preserving affordable housing across the country. 

For the full year, NEF raised and deployed nearly $2 billion in affordable housing investments, including a record-level of financing for LIHTC-specific equity at more than $1.43 billion and nearly $425 million in preservation lending and workforce housing investments. In total, our 2023 efforts allowed us to create or preserve and additional 11,100 affordable homes nationwide, showing our dedication to our mission and our unyielding vision that all individuals and families across the country have access to affordable homes.

Notably, we exceeded our financial goals with an all-time high net income in 2023, which in turn enabled our largest grant to LISC to date, at $17.5 million, bringing NEF’s grant total to over $240 million to date in support of LISC's nationwide community development work.

We also deployed $70 million through our Emerging Minority Developer Fund (EMDF), helping to facilitate LIHTC access for affordable housing developers of color. The 2023 investment through EMDF will create 323 total units of affordable housing in eight developments across eight different states, and we still have more than half of our nearly $150 million from the first iteration of the fund to deploy as we continue to close projects throughout 2024. 

On the innovation side, we continue to find new ways to deepen and broaden our impact through new products, services, geographies, and partnerships, including our acquisition of MPEG, which expanded our presence in the West. We also continued to advance our Preservation and Workforce Housing funds which will become even more attractive in a stabilized rate environment when the tides turn positive for our industry once again. Normalized rates will also benefit our ownership stake in CPC Mortgage Company, the only nonprofit lender with a suite of Freddie Mac, Fannie Mae and FHA products.

We remain bullish on the long-term benefits of our business diversification and proud of our ability to serve our investors, developers, residents, and communities through the cycle, and during the highs and lows to position NEF for a stable and successful future in continued service of our mission. To have such a successful year after nearly four decades in this industry shows why we are pioneers in this space. Our desire to constantly evolve and examine new ways to support our partners and communities across the nation is what brought us to the table, and it is what will keep us there for years to come. We will continue focusing on our core businesses while developing innovative ways to expand our market, creating more affordable homes in the process.

Importantly, we know none of these results would have been possible without the strength, talent, and expertise of our internal teams and we were proud to once again be named as one of the Best and Brightest Companies to Work For® in both Chicago and in the nation for the third year in a row.

As we move through 2024, we are excited about the opportunities ahead and stand ready to withstand any challenges that come our way. We started the year with an exceptionally strong LIHTC pipeline of over $1.2 billion secured to close in 2024. The biggest market unknown continues to be if the Senate will ratify the tax package that the House passed in January, creating the largest expansion to LIHTC since it was first introduced in 1987. Not only would the 12.5% boost become active for 2024, it would also be retroactively applied for 2023 putting 25% more credits in the market. A potentially even bigger change would be the proposed easing of restrictions on the 4% credit pool.  All-in-all, it would unleash more than $4 billion of dollars in tax credits annually.

And like you, we are eagerly anticipating the additional clarity on CRA reform and look forward to working with you to discuss a path forward once we know more in the weeks and months ahead. On behalf of our entire organization, I am proud of these strong results in such a challenging year and grateful to our sponsors and investors who partnered with us to deliver such meaningful impact. I look forward to what we can do together in 2024 to ensure more families and individuals across the country have a safe, stable and affordable place to call home.

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