Systima Closes $153M Tax-Exempt CMBS Affordable Housing Deal
Affordable housing bonds in the private-label transaction generate robust investor demand and highlight a new structure to fund subsidized multifamily properties.
By Andrew Coen July 23, 2026 5:54 pm
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A private-label securitization closed by Systima Capital Management for a portfolio of nearly 1,300 subsided apartments underscores the potential for use of the commercial mortgage-backed securities (CMBS) market in affordable housing deals.
Systima closed the $153 million tax-exempt affordable housing bond deal through the Public Finance Authority securitized by a pool of loans on seven properties by the federal Low-Income Housing Tax Credit (LIHTC) program. The transaction, which utilized tax-exempt CMBS debt for the 1,272-unit portfolio across Wisconsin, Illinois, Florida, Tennessee and Texas were “significantly oversubscribed” with more than $1.2 billion in orders from 19 institutional investors, according to Systima.
Ryan Paszczykowski, head of structured investing at Systima, said the tax-exempt CMBS offering in the deal is poised to become more mainstream going forward thanks to strong investor appetite. J.P. Morgan led the transaction as the lead underwriter with Wells Fargo as co-manager, while Systima retained the subordinate Class B certificates.
“I think institutional investors are starting to realize the credit protections that currently exist in affordable housing and the significant need for affordable housing,” Paszczykowski told CO. “I think the market is going to grow going forward.”
Paszczykowski noted that tax-exempt CMBS financings have been used for affordable housing projects in the past but were typically “one off” that banks executed to free up their balance sheets. He said Systima is seeking to become one of the first dedicated managers to bring this capital markets strategy to the forefront as an avenue to deliver high-risk adjusted returns to investors.
The original loan proceeds were used to fund acquisition, construction, rehabilitation and preservation of the affordable housing communities geared toward families earning at or below 60 percent of area median income. The exact locations and names of the individual properties were not provided by deal participants.
Jason Kahn, executive director at J.P. Morgan, said in a statement that strong credit ratings of A-minus for Class A-1 certificates and BBB-plus for Class A-2 certificates by S&P Global Ratings “reflect the quality of the housing development associated with the loans, historically low delinquency and foreclosure rates of LIHTC multifamily housing.”
Andrew Coen can be reached at acoen@commercialobserver.com.
