City Securities Corporation’s real estate business is exclusively focused on the use of Section 42 tax credits as permitted by the Internal Revenue Code of 1986, as amended (“the Code”), and our ability to create arbitrage opportunities for investors. We do this by analyzing points along the “real estate transaction continuum” which afford such opportunities.
Section 42 real estate transactions begin with a developer who has a vision of what a parcel of land or an acquired building can become. As such, we create relationships with developers of low income housing in order to finance their transactions with investor clients. Consequently, many developers ask us to help them ask “what if” as they are standing on a parcel of undeveloped land.
The Real Estate Division’s role in the transaction is significantly more complicated than that of a tax credit syndicator. We look to create arbitrage opportunities for our investors within the confines of a real estate transaction.
We develop these opportunities by creating bridge notes to finance equity investments. In its simplest terms, the investments are structured using affordable housing tax credits that use leverage to make a "good deal" a “better deal."
Our Real Estate Division’s business model serves three distinct, yet interwoven, constituents. Developer clients are served by raising debt and equity for affordable housing developments; banks and financial institutions are served by purchasing the equity and providing the debt; and investors who purchase the bridge notes that finance the equity investment are also served through returns on their investment. The Real Estate Division’s role is to facilitate the flow of information, benefits and wealth from the developer to the equity investors and bridge note investors, and then back again to the developer.
We add value to Section 42 transactions by creating unique financial opportunities for developers and tax credit investors.