Reps. Pat Tiberi and Richard Neal Introduce Legislation to Improve the LIHTC
In late March, Representative Pat Tiberi (R-OH) and Ways and Means Committee Ranking Member Richard Neal (D-MA) introduced the Affordable Housing Credit Improvement Act of 2017 (H.R. 1661). The bipartisan bill aims to improve the Low Income Housing Tax Credit through a number of changes:
- Establishes a minimum 4% rate for credits paired with bonds
- Allows for income averaging at LIHTC properties – caps household income at 80% AMI and allows for the average income to be 60% AMI rather than cap all units at 60%. Including higher incomes would allow projects to feasibly target deeper affordability.
- Streamlines income eligibility for rural projects.
A bill summary is available outlining all improvements.
The bill serves as companion legislation to S. 548, introduced earlier this month by Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) earlier this month. One notable distinction between the two pieces is that S. 548 calls for a 50% expansion to the Credit whereas the house bill does not. NH&RA applauds Representatives Tiberi and Neal on taking an important step towards improving the LIHTC.
Representatives Tiberi and Neal are joined by 16 co-sponsors (9 Republicans and 7 Democrats). The Bill currently sits in the House Ways and Means Committee, with 13 of its original co-sponsors sitting on the Committee.
While H.R. 1661 and S.R. 548 are off to great starts, they need your help in the House and Senate. The ACTION Campaign has a great collection of advocacy tools and information about efforts to protect, strengthen and expand the Housing Credit, including state and congressional district-specific fact sheets on the Credit. As always, feel free to contact NH&RA as well regarding how you can best advocate on behalf of improving the LIHTC.*
Done Deals: Starwood Capital, Blackstone Move to Wrap up Separate $1 Billion+ Buyouts
The end of the first quarter brings key moves to complete two large transactions in the apartment and seniors housing sectors: Starwood Capital Group's $1.3 billion takeover of Milestone Apartments Real Estate Investment Trust and Blackstone's $1.13 billion acquisition of 64 assets owned by HCP, Inc. (NYSE: HCP) and formerly leased to Brookdale Senior Living, Inc. (NYSE: BKD).
Milestone REIT announced Tuesday that its unitholders approved the takeover by a Starwood Capital affiliate after Starwood agreed to sweetened its offer to $16.25 per Milestone unit in cash. Nearly 72% of unitholder cast votes in favor of the offer, well above the two-thirds required to approve the transaction, now expected to formally close by April 28.
Meanwhile, Irvine, CA-based HCP on Tuesday announced it has completed the sale of a portfolio of 64 triple-net assets totaling nearly 6,000 seniors housing units to Blackstone Real Estate Partners VIII LP for $1.125 billion, a deal reported by CoStar last November. As part of the deal, Nashville-based Brookdale Senior Living Inc. acquires a 15% interest in a joint venture that acquired the portfolio.
Blackstone purchased the portfolio from HCP subject to the existing leases, and Brookdale and Blackstone formed a JV, with Blackstone contributing the portfolio and Brookdale contributing approximately $180 million to acquire a 15% equity interest in the venture, terminate leases and fund its share of the closing costs.
As of Dec. 31, 2016, Brookdale operated about 1,055 independent living, assisted living, dementia-care communities and continuing care retirement centers in 47 states.
Tom Herzog, chief executive of HCP, called the transaction "another significant step toward executing on our strategic priorities of reducing Brookdale concentration, improving lease coverage and strengthening our balance sheet and credit profile." **
National Forecast Indicates Home Prices Expected to Increase 4.7% in Next 12 Months
CoreLogic, a leading global property information, analytics and data-enabled solutions provider, released its CoreLogic Home Price Index (HPI) and HPI Forecast for February 2017 which shows home prices are up both year over year and month over month.
Home prices nationwide, including distressed sales, increased year over year by 7 percent in February 2017 compared with February 2016 and increased month over month by 1 percent in February 2017 compared with January 2017, according to the CoreLogic HPI.
The CoreLogic HPI Forecast indicates that home prices will increase by 4.7 percent on a year-over-year basis from February 2017 to February 2018, and on a month-over-month basis home prices are expected to increase by 0.4 percent from February 2017 to March 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
“Home prices and rents have risen the most in local markets with high demand and limited supply, such as Seattle, Portland and Denver,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The rise in housing costs has been largest for lower-tier-priced homes. For example, from December to February in Seattle, the CoreLogic Home Price Index rose 12 percent and our single-family rent index rose 6 percent for all price tiers compared with the same period a year earlier. However, when looking at only lower-cost homes in Seattle, the price increase was 13 percent and the rent increase was 7 percent.”
“Home prices continue to grow at a torrid pace so far in 2017, and these gains are likely to continue well into the future,” said Frank Martell, president and CEO of CoreLogic. “Home prices are at peak levels in many major markets and the appreciation is being driven by a number of dynamics—high demand, stronger employment, lean supplies and affordability—that will continue to play out in the coming years. The CoreLogic Home Price Index is projecting an additional 5 percent rise in home prices nationally over the next 12 months.”***
Senior Housing Finance Activity: KeyBank, Grandbridge
KeyBank Provides $703 Million for Blackstone’s 64-Community Senior Housing Acquisition
KeyBank Real Estate Capital’s Healthcare platform recently provided a $703 million financing package to a joint venture led by Blackstone (NYSE: BX) that purchased a senior housing portfolio with 64 communities from HCP, Inc. (NYSE: HCP).
The portfolio is made up of 5,973 units in 19 states. The 64 communities are currently managed by Brookdale Senior Living (NYSE: BKD), which will continue to operate the communities, as well as obtain an ownership interest in the portfolio as part of the new joint venture.
The financing package enables the joint venture to access immediate loan proceeds for the purchase and provides future financing capacity based on the performance of the underlying assets. Most of the financing is made up of a Fannie Mae Credit Facility that provides the joint venture with low-cost, long-term, flexible financing on a non-recourse basis and is highlighted by flexible terms.
Peter Trazzera of KeyBank Real Estate Capital’s Healthcare Group led the financing team for KeyBank’s balance sheet, while Charlie Shoop of KeyBank Real Estate Capital’s Commercial Mortgage Group led the financing team for the Fannie Mae Credit Facility.
Grandbridge Secures $229.3 Million Credit Facility for Senior Housing Portfolio
Richard Thomas and Meredith Davis of Grandbridge Real Estate Capital’s Seniors Housing and Healthcare Finance Group recently arranged a $229.3 million agency credit facility secured by a portfolio of 14 seniors housing assets in 10 states.
The borrower was not disclosed.
CBRE Arranges $16.25 Million Loan for The Waters Senior Living
Vice Chairman of CBRE National Senior Housing Vice Chairman Aron Will recently arranged acquisition financing on behalf of a joint venture between an institutional client and Minnetonka, Minnesota-based senior living developer/owner/operator The Waters Senior Living for The Waters of Plymouth, a Class A, 89-unit assisted living and memory care community in Plymouth, Minnesota.
Specifically, CBRE secured a $16.25 million, three-year floating rate loan with 36 months of interest only from a national bank. The Waters will continue to manage the community, according to a press release.
Capital Funding Group Closes Three HUD Refinances
Baltimore, Maryland-based Capital Funding Group recently closed three HUD loan refinances.
Specifically, Capital Funding, LLC closed an $18.9 million HUD refinance for the Lodge at Old Trail, an assisted living community in Crozet, Virginia, to provide the borrower with a lower interest rate. Director of Real Estate Finance Gary Sever originated the loan, which closed on Feb. 27.
Capital Funding, LLC also closed a $2.57 million HUD refinance of existing debt for an assisted living community in North Carolina. Sever also originated this loan, which closed on Feb. 28.
Additionally, Capital Funding, LLC closed a $10.5 million HUD Refinance for Brinton Woods Health & Rehabilitation Center, a 183-bed skilled nursing facility in Washington, D.C. Director of Real Estate Finance Patrick McGovern originated the loan, which closed on Feb. 15.
Strawberry Fields REIT Refinances Skilled Nursing Facility in Indiana
Strawberry Fields REIT LLC, an owner and lessor of skilled nursing facilities, medical office buildings and long-term acute care hospital facilities in the Midwestern and Southern United States, recently announced it closed on a $4.4 million HUD guaranteed loan to refinance The Waters of Scottsburg, a 99-bed skilled nursing facility in Scottsburg, Indiana.
Strawberry Fields acquired The Waters of Scottsburg in 2014. The community has a current occupancy of 69%.
The new loan has a 35-year term at 3.65% fixed interest.
Strawberry Fields owns 57 facilities in Indiana, Illinois, Ohio, Michigan, Texas, Tennessee, Kentucky and Oklahoma.
Harborview Closes $36.3 Million Acquisition Loan for Two Skilled Nursing Facilities in Tennessee
Commercial real estate finance, equity and advisory firm Harborview Capital Partners recently arranged $36.3 million in financing for the purchase of two skilled nursing facilities in Nashville, Tennessee.
The $36.3 million in proceeds includes senior acquisition and capex loans, in addition to an A/R line of credit. The acquisition loan involves 12 months interest-only and partial recourse at 85% LTC.
The transaction was originated by Harborview Senior Originator Eli Kutner.
Nonprofit Receives $2.5 Million Funding for Senior Community in Massachusetts
Nonprofit organization Sisters of Providence was recently awarded $2.5 million in federal and state funding to build a 36-unit housing complex for homeless seniors in West Springfield, Massachusetts, The Republican reported.
The funding includes $2 million from the Massachusetts Department of Housing and Community Development and $500,000 from the National Housing Trust Fund. ****
- Gill Group plans to attend MHC’s Annual Meeting April 11th – 13th in Biloxi, MS.
- Cash Gill, of Gill Group, will be giving a training session to New Mexico’s MFA staff regarding appraisals April 20th in Albuquerque, NM.
- Gill Group plans to attend AHF Live’s Special Session in April 26th – 28th in New Orleans, LA.
- Gill Group attended the Crittenden Multifamily Conference March 15th – 17th in Dallas, TX.
- Gill Group attended the Maco Companies’ Annual Meeting March 16th – 19th in Biloxi, MS.
- Gill Group attended the Bank of Advance’s Annual Meeting March 16th – 19th in Norfork, AR.
- Cash Gill attended the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting March 7th in Jefferson City, MO.
- Gill Group attended National Housing & Rehabilitation Association’s Annual Meeting February 22nd – 26th in Bonita Springs, FL.
- Gill Group attended the National Leased Housing Associations’ Mid-Year Meeting February 1st – 3rd in Naples, FL.
- Gill Group and National Title & Escrow attended the Council for Affordable Rural Housing’s (CARH’s) Midyear Meeting (Strengthening Rural Housing with Valued Partnerships) January 23rd – 25th in Sarasota, FL.
- In 2016, Gill Group attended over 75 meetings and conferences across the entire United States.
GROWTH (2016 - Highlights):
- Gill Group added over 20 staff members throughout our 15 national and regional offices including MAIs, General Certified Appraisers, PE Engineers and AIA Architects.
- Gill Group’s subsidiary, National Title & Escrow (NTE), added two new underwriters: Fidelity National Title Insurance Company and Stewart Title Guaranty Company.
- NTE also added a new sales representative, Jimmy Crace, bringing 20+ years of experience and well over 100 national relationships in commercial and multifamily title.
- In 2015, Gill Group attended over 50 meetings and conferences from California to New York, and just about everyone in between.
GROWTH (2015 - Highlights):
- Gill Group added two offices in Michigan and one in Wisconsin, further expanding our staff of architects and engineers.
- Gill Group and Greystone formed a Joint Venture to provide a full line of consulting and development services for Rental Assistance Demonstration (RAD) transactions. Gill Group and Greystone are utilizing each of our areas of expertise in a collaborative effort, with a mission to partner with PHAs across the nation in preserving and expanding the affordable housing inventory under the HUD RAD program. Our team fully understands the intricacies of the real estate and affordable housing industries, and our services are provided by professionals who are fully immersed in LIHTC executions, construction management, project accounting, regulatory compliance, real estate transactions, and opportunity development. We sit on national and state boards and have in-depth knowledge of industry trends and best practices. As a developer team, we operate as three individual entities, each with a unique set of previous transaction experiences that add value to the project at hand. As a collaborative unit, we draw upon those experiences to bring to the table creativity, fresh ideas and unsurpassable development advisory services.
- Gill Group’s subsidiary, National Title & Escrow, added two new offices in Missouri and Arkansas, further expanding our ability to service our nationwide base of customers.
- Gill Group attended 40+ meetings and conferences throughout the United States in 2014.
GROWTH (2014 - Highlights):
- Gill Group began the process of working with owners of affordable housing to develop a web-based program that will work hand-in-hand with our services. It will give the users of our appraisals, market studies, capital needs assessments and many other services easy access and real time usage.
- Gill Group added 2 offices with appraisers, market analysts, engineers and architects.
- Within the offices are 11 architects, one MAI appraiser, one general certified appraiser, four market analysts and 12 additional support staff.
Gill Group has published the following:
- New York Real Estate Journal - How can low-income housing facilities translate into high profits?
- New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
- Tax Credit Advisor - Boston MSA Market Snapshot
- Tax Credit Advisor - Seattle MSA Market Snapshot
- Northeast Industrial Development Resource Guide - What Appraisers Know About Investing.
- Affordable Housing Finance – Urban and Rural Market Studies.
- Tax Credit Advisor – LIHTC Appraisals 101
- Affordable Housing Finance – Five Ways to Optimize a Market Study
Cash Gill, MAI has had the opportunity to speak on the following topics:
- (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
- (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
- (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
- (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
- (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
- (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
- (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
- (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
- (Washington, DC) Council for Affordable and Rural Housing - How to Foster Affordable Green and Rural Housing Needs Assessments
- (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
- (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
- (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.
- (Atlanta, GA) National Council of State Housing Agencies – Comprehensive Market Analysis.
- (Chicago, IL) AHF Live – Strategies for Rural Deals.
- (Dallas, TX) Crittenden Multifamily – Financing Special Use Properties.
- (Washington, DC) Council for Affordable Rural Housing – Rural Housing Preservation
- (Denver, CO) National Council of State Housing Agencies – Rural Housing Strategies
- (Denver, CO) National Council of State Housing Agencies – Y15: Preservation and Disposition Seminar
- (San Antonio, TX) Rural Rental Housing Association – LIHTC Legislative Update
- (Key Largo, FL) Council for Affordable Rural Housing – How National Appraisal Practices Impact USDA Assisted Properties
- (San Francisco, CA) National Council of State Housing Agencies – Changes and Challenges in Rural Housing Development
- (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
- (Franklin, TN) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
- (Columbus, OH) Council for Rural Housing & Development of Ohio – Rural Housing Market Research
- (South Bend, IN) Great Lakes Capital Fund’s University of Affordable Housing – Valuation Risks Using Financing for RAD Deals
- (Chicago, IL) National Council of State Housing Agencies – Rural Development Opportunities
- (Orlando, FL) National Association of Housing and Redevelopment Officials – Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies
- (Alexandria, LA) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
- (Ft. Lauderdale, FL) Southeastern Affordable Housing Management Association (SAHMA) – Rent Comparability Studies 101
- (Indianapolis, IN) Midwest Buyer/Seller Conference – CNAs and Appraisals
- (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities (2014)
- (St. Pete Beach, FL) CARH – Preservation Challenges and Opportunities
- (Nashville, TN) TAHRA – Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies for LIHTC and RAD Transactions
- (Los Angeles, CA) NCSHA – Successful Development in Challenging Markets
- (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities
- (Seattle, WA) NCSHA – Rural and Native American Development Strategies
- (French Lick, IN) AHAIN – Appraisals and CNAs
- (French Lick, IN) AHAIN – Pulling it All Together
- (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
*as seen on housingonline.com
**as seen on costar.com
***as seen on multifamilybiz.com
****as seen on seniorhousingnews.com
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