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Market For Property Disposition at Year 15 and Earlier The Institute for Professional And Executive Development October 11,2007 Robert L. Sheppard Senior.

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Presentation on theme: "Market For Property Disposition at Year 15 and Earlier The Institute for Professional And Executive Development October 11,2007 Robert L. Sheppard Senior."— Presentation transcript:

1 Market For Property Disposition at Year 15 and Earlier The Institute for Professional And Executive Development October 11,2007 Robert L. Sheppard Senior Director National Tax Credit Property Advisors of Marcus & Millichap

2 LIHTC Portfolio Totals Data provided by NAHB & NCSHA

3 LIHTC Portfolio Potential Activity Data provided by NAHB & NCSHA * *Year Placed in Tax Credit Program 1,005, , ,417

4 LIHTC Lifecycle Opportunities Years Partnership interest sale –Mid Term GP sale –Options open for later resyndication –Capital markets starting to materialize for execution Fee simple (cash flow) transaction – Currently the most common scenario –Surety bond required –Yields similar to market rate IRR / CAP Rate

5 LIHTC Lifecycle Opportunities Years 15 and beyond Fee simple (cash flow) transaction: Currently the most common scenario –No surety bond required after Year 15 Acquisition-rehab: likely to increase as more units with extended use become eligible –Available volume: 185,999 units in 2007; 288,917 units in 2008; average 113,000 annually over the next 10 years Price Comparison: –Cash Flow vs Resyndication on YR 15 acquisitions oTrends show in many circumstances re-syndication likely to yield more oBuyers have similar behaviors, LIHTC starts below the price a buyer will pay due to fear of loss

6 Years 15 and beyond Execution Strategies: –Keep affordable; sell to cash flow buyer – Current GP Re-syndicate the deal oAnti-Churning rule an issue –Sell and Re-syndicate oMarket to buyers of LIHTC properties –Hold oNeed to buy out LP LIHTC Lifecycle Opportunities

7 Market For Property Disposition at Year 15 and Earlier October 11,2007 Robert L. Sheppard Senior Director National Tax Credit Property Advisors of Marcus & Millichap Additional information available at:


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