Journal Article

Case study: The Community Development Trust taps Wall Street investors

Abstract: The Community Development Trust (CDT) is the country?s only real estate investment trust (REIT) devoted solely to providing debt and equity capital for financing community development projects. CDT?s initial effort to meet its mission was the introduction of a debt program, which focused on creating a secondary market for smaller (under $3 million) Low Income Housing Tax Credit (LIHTC) loans. CDT?s equity capital was insufficient to fund and retain the whole loans created under the program. As a solution, CDT sought out institutional investors to purchase a 90 percent senior interest in each loan with CDT holding a 10 percent subordinate interest. In this way, every $1 million of CDT?s equity capital financed $10 million in loans.

Keywords: Real estate investment trusts; Community development; Housing - Finance;

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Community Development Innovation Review

Publication Date: 2006

Issue: 1

Pages: 57-63