MuniMae affiliate ventures overseas

International Housing to raise capital for affordable homes in Jordan, S. Africa

February 21, 2007|By Paul Adams | Paul Adams,Sun reporter

Municipal Mortgage & Equity LLC, the Baltimore company better known as MuniMae, said yesterday that a U.S. agency that helps companies invest overseas will provide one of its affiliates with $100 million in seed money to invest in affordable housing in Africa and the Middle East.

The affiliate, International Housing Solutions, will use the seed money to raise an additional $200 million from capital markets to develop affordable housing units primarily in Jordan and South Africa, marking the real estate investment firm's first international development venture.

The U.S. Overseas Private Investment Corp., which has its roots in the United States' efforts to rebuild Europe with private investment after World War II, selected the firm to manage the private investment fund through a competitive bidding process.

MuniMae is among the largest financiers of affordable housing in the United States, with about $8 billion worth of such projects under management. That expertise helped guide the company's efforts to expand overseas. International Housing Solutions, a joint venture with Dublin, Ireland-based Howard Eurocape Ltd., will profit mainly from managing the assets.

Michael L. Falcone, MuniMae's chief executive officer, said it is hoped this will be the first of many affordable housing investments the company puts together outside the U.S.

"Our appetite isn't limited to just these countries," he said, referring to the housing fund's focus on South Africa and Jordan.

OPIC's involvement will help make the investment more attractive to pension funds, banks, insurance companies and other institutional investors who might otherwise be reluctant to invest in developing markets. The agency promotes development in about 150 emerging markets with the goal of boosting economic development and forwarding U.S. policy goals.

"If they know OPIC is involved and the U.S. government is involved, it's like having a Good Housekeeping seal of approval and makes it easier for fund managers to go out and raise capital," said Lawrence Spinelli, a spokesman for the agency.

Emerging markets offer greater investment risk, Spinelli said, but investors are drawn by the potential for greater rewards.

"With a successful emerging market fund, the returns are going to be much higher than for a domestic fund because the risks are obviously much higher," he said.

Through its affiliate, MuniMae has opened an office in South Africa and committed to its first transaction, which will be a joint venture with a South African real estate developer to redevelop a group of properties in Johannesburg. The investment will provide 143 affordable housing units and 38 commercial properties.

MuniMae's shares rose 27 cents, or nearly 1 percent, to $29.89 in trading yesterday.

paul.adams@baltsun.com

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