Enterprise Community Investment has expanded its Fannie Mae DUS license to include funding for workforce housing deals.

While the company has had a Fannie Mae license since 1994, it was limited to affordable housing deals, such as forward commitments on tax-credit deals or tax-exempt bond credit enhancements. Those transactions targeted households earning up to 60 percent of the area median income (AMI), a small segment of the overall multifamily market.

But now, the Columbia, Md.-based company can finance developments that serve folks earning up to 115 percent of the AMI, a much broader swath of the industry.

“One of Enterprise’s long-term initiatives is the creation and preservation of workforce housing,” says C. Lamar Seats, a senior vice president in Enterprise’s multifamily mortgage finance program. “Our move into the market-rate space was really focused on carrying our mission forward, and to give us a much broader base of opportunities to finance.”

The 115 percent AMI threshold is unique in the world of DUS lenders, many of whom are moving to larger deal sizes and privileging Class A assets where possible. But Class B and C assets that serve those earning between 80 percent and 115 percent AMI “is probably 85 to 90 percent of the entire market out there,” Seats says. “It’s a huge piece.”

While large, the workforce housing space has fewer financing options available than affordable housing, which can tap many local, state, and federal programs to build the capital stack. “That middle spectrum, between affordable and higher-end properties, has much fewer financing options,”  Seats says. “And you have older properties, 20 or 25 years old, that need to be preserved. Hopefully, we can be of some assistance there.”

The company is looking for deals of more than $3 million. Enterprise plans to expand its mortgage group, hiring a few market-rate focused originators next year to have a local presence in major markets. While Enterprise processed about $75 million in debt annually under its old “special affordable” license, the company now has a goal of originating between $300 and $400 million annually in five years.