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+ A LIHTC UPDATE Noel Henderson-James Richman Housing Resources LLC April 2013 A Market Re-defined LIHTC Since 2007 2007 2013.

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Presentation on theme: "+ A LIHTC UPDATE Noel Henderson-James Richman Housing Resources LLC April 2013 A Market Re-defined LIHTC Since 2007 2007 2013."— Presentation transcript:

1 + A LIHTC UPDATE Noel Henderson-James Richman Housing Resources LLC April 2013 A Market Re-defined LIHTC Since 2007 2007 2013

2 + Overview We’ll look back, review some trends, & then gaze, however obscurely through our crystal ball, at what’s ahead. What we’ll see is that the LIHTC market has become defined – is now redefined – by two interconnected characteristics: Pricing variability, sometimes dramatic; and, Market segmentation, somewhat defined by geography, and further sub-market segmentation. Both these characteristics are (or should be) expected & are natural to a rationale, functional market. They certainly make the world a more interesting place.

3 + Trends: Investment Volume

4 + Trends: Pricing Variability Source: Novogradic

5 + Trends: Yields, 1991 to 2012 Source: Ernst & Young

6 + Trends: Yields, 1991 to 2012 Source: Ernst & Young

7 + Trends: Yields, 2008 to 2012 (for indicative purposes only) Non-CRA Spread to Tax-Adjusted 10-Yr Treasuries

8 + Trends: Yields, 2008 to 2012 (for indicative purposes only) Feb-12 May-12 Red = Heavily-banked Moderate premium subtracts 50-100bps; Heavy premium subtracts another 100bps.

9 + Trends: What Yield Data Reveals Among investors, there is clear segmentation within the market, often along geographic lines. Roughly, very roughly, there appear to be three separate markets: heavily-banked, moderately-banked and otherwise. Most times, but not necessarily always, these markets will function in parallel to one another. Sometimes one submarket might disconnect from the broader markets but eventually in back in-line.

10 + Emerging Trends: Early 2013 National market is stabilizing at the yield requirements of economic investors, somewhere likely just north of 7.25%; Expect moderately- and heavily-banked markets to follow suit, although this may take time. Prediction #1: National market will lead in defining pricing trends. Prediction #2: Heavily-banked markets will become more defined around regulatory cycles. Prediction #3: Pricing variance will be greatest in heavily- banked markets.

11 + Summary The market has repaired itself; and, it is probably healthier than it was prior to the financial crisis. Capital levels have rebounded and stabilized. More investors and substantially more “economic” investors… LIHTC is a money making business opportunity. Average pricing has improved and also stabilized. Yields have retreated from recession highs and also seem to have stabilized. But the market is radically different from the pre-financial crisis market. More pricing variability around averages and means. Greater segmentation among markets and within markets.

12 + Summary Deals in different geographies may see radically different pricing. Deals in the same market may see radically different pricing, especially true of heavily-banked markets. Characteristics that now matter much more are: Geography, first and foremost; then, Deal size and opportunities; Developer: track record, financials and relationship; and, Novelty.


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