IRS Distributes Unused LIHTC Carryover
The Internal Revenue Service has published the amounts of unused low-income housing tax credit carryovers for 2014.
This year $2.59 million was distributed to 35 states and Puerto Rico, with California receiving the largest amount.
State: Allocated ($)
New Hampshire: 12,593
New Jersey: 84,682
New York: 186,992
North Carolina: 93,710
North Dakota: 6,884
Puerto Rico: 34,400
Rhode Island: 10,006
South Dakota: 8,040
West Virginia: 17,645
Apartment Completions Reach a 14-Year High
New apartments are coming on stream across the U.S. at the highest levels seen in more than a decade, according to MPF Research, an industry-leading market intelligence division of RealPage, Inc. Properties finished in the nation’s 100 largest metros during the third quarter of 2014 totaled 66,813 units, the biggest block of new supply introduced during a three-month period since late 2000. The annual completion pace stood at 226,615 units at the end of September, likewise hitting a total last seen in late 2000.
The new product delivery pace will accelerate even further during the next few months. Properties totaling another 90,078 units are scheduled to wrap up construction during the fourth quarter of 2014, bringing completions targeted during the calendar year to 257,767 units.
MPF Research analysts highlight the nation’s latest apartment completion statistics, as well as other key performance indicators for rental housing in a discussion found at www.realpage.com/MPFq3-2014-Report.
“The wave of new supply coming for the past year or two now is beginning to crest,” according to MPF Research vice president Greg Willett. “The timing looks right for this cycle, as the job production needed to stimulate household formation also has gained some momentum this year.”
Continuing the pattern seen for the past few years, demand for apartments is surpassing delivery volumes, even as those completion tallies climb. Demand numbers registered at 78,571 units in the third quarter and 254,993 units in the year-ending in September.
“There’s a strong appetite for rental units,” Willett said. “While the economy isn’t performing at ideal levels, there’s enough momentum to stimulate significant growth of renter households. The overall performance numbers in the apartment sector are also being helped by the limited number of first-time homebuyers. Loss of apartment residents to purchase remains at a trickle.”
Apartment occupancy across the nation’s 100 largest markets registered at 95.7 percent as of the third quarter. Occupancy improved from 95.6 percent as of the second quarter and from 95.4 percent as of 2013’s third quarter.
The apartment rent growth pace is accelerating during 2014, and the trend continued in the third quarter. Effective rents for new leases jumped 1.3 percent during the quarter, taking the annual rent growth pace to 3.7 percent.
The San Francisco Bay Area and Denver remain the country’s rent growth leaders, maintaining the positions seen over the past couple of years. Effective rents for new leases are climbing at annual rates of 9.1 percent in Oakland, 9 percent in Denver-Boulder and San Jose, and 7.4 percent in San Francisco.
At the next tier of performance, annual effective rent growth is coming in at 6.4 percent in Atlanta, 6 percent in Seattle, 5.8 percent in Portland and Sacramento, and 5.3 percent in West Palm Beach.
Completing the list of annual rent growth leaders among the country’s big markets are Houston and Las Vegas, each realizing 4.6 percent pricing increases.
“Las Vegas is a newcomer to the list of rent growth leaders,” Willett said. “The performance seen over the last couple of quarters is a dramatic shift from earlier results, since Las Vegas previously was one of the country’s laggards for rent growth. Job production and apartment occupancy now are improving rapidly in Las Vegas, and pricing power is returning in the apartment sector. In the big picture, however, this one still has some work to do. It’s the only big market in the nation where today’s rents still trail pre-recession prices.”
A couple of metros where apartment investors deployed sizable blocks of capital fell to the bottom of the list for rent change. Washington DC, which is now dealing with record numbers of new apartments coming on stream, is experiencing minor rent cuts. Effective rents for new leases dipped 0.1 percent during the year ending in third quarter. Pricing also is essentially flat in New York, where rents are inching up just 0.1 percent on an annual basis.
Ongoing apartment construction in the nation’s 100 largest apartment markets registered at 387,397 units at the end of the third quarter. Ongoing building activity has been holding fairly steady at some 350,000 to 400,000 units since early 2013. However, that figure could come down quickly during the next few months, if the large block of new supply scheduled to finish during the fourth quarter actually gets completed as targeted.
“Look for a minor bump in the road in the apartment market’s performance right at the end of the year, given so much new supply will be added during a period when demand is seasonally weak,” according to Willett. “However, completions in 2015 should return to a level in line with 2013’s deliveries, allowing performance momentum to return quickly.”
“There’s about to be a brief window when renters looking for comparative bargains have a good chance of finding them, but that opportunity won’t last long,” Willett said.**
Fannie Mae’s Report: Near-Term Growth Outlook Remains Intact as Economy Continues to Accelerate
A recent rebound in business investment has bolstered expectations for solid economic growth during the remainder of 2014, according to Fannie Mae's Economic & Strategic Research (ESR) Group. The robust headline growth in the second quarter was upgraded from 4.0 to 4.2 percent in the government's second estimate, with contributions from nearly all major GDP components. In addition, recent data through June showed upward revisions on net, suggesting that second quarter growth likely will be revised higher.
"In our September forecast, we see the economy continuing to accelerate toward 3.0 percent growth in the second half of the year, in line with our prior forecast," said Fannie Mae Chief Economist Doug Duncan. "Business spending and confidence are trending up, and we expect to see a healthy increase in business capital investment in the third quarter following the double-digit annualized gain in the second quarter. Consumer spending fell unexpectedly in July, as more Americans appeared to be building their savings amid weakened income expectations, however a surge in auto sales suggests a reversal in August. If the labor market continues to improve, consumers will likely be more willing to take on additional credit card debt, giving a boost to spending growth. Additionally, a decline in crude oil prices again in August has lowered the cost of gasoline, which we expect to add to disposable income and support spending in the current quarter."
"Recent housing activity isn't quite as positive, having shown only lukewarm growth since a promising start to the third quarter, but our forecast is little changed from August," said Duncan. "Purchase mortgage applications have trended down over the past three months, despite the declining interest rate environment. We believe this suggests a residual conservatism on the part of consumers and supports our view that the pace of growth in the housing sector will be subdued during the remainder of 2014, with modest improvement in 2015."
For an audio synopsis of the September 2014 Economic Outlook, listen to the podcast on the Economic & Strategic Research site at www.fanniemae.com. Visit the site to read the full September 2014 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary.**
New Senior Housing Play
Armed with a $500 million investment fund, a new private equity group co-founded by Brookdale Senior Living’s (NYSE: BKD) most recent past-co-president and chief of operations re-envisions similar success as it plans to ramp up senior living acquisitions with its newfound partners in the coming years.
After embarking on a capital campaign last fall, Chicago Pacific Founders is about ready to close out its investment fund. Two-hundred and fifty million dollars in equity will be invested in senior housing, enabling the fund to acquire significantly more than a quarter billion dollars worth of senior housing with leverage. It has partnered with an established senior living management company with decades of industry experience.
Of the total $500 million raised, CPF plans to invest $250 million over the next three to four years to acquire senior housing properties, including those that are underperforming or distressed. Asset types on the firm’s radar include independent, assisted living, memory care and continuing care retirement communities (CCRCs), but not skilled nursing, says John Rijos, Chairman and CEO of CPF Living Communities.
“These will be all in-place acquisitions,” Rijos tells SHN. “We’re looking opportunistically for situations where we can take advantage of errors in the marketplace.”
Rijos, whose senior housing expertise harkens back to his role as co-president and chief operating officer of Brookdale from 2000 to 2013, attributes the namesake of the private equity firm—headed by ex-Accretive Health CEO Mary Tolan—to its dual headquarters in Chicago and San Francisco.
During his tenure with Brookdale, Rijos helped grow the company from just 16 communities to a count of 650 before his retirement in April 2013. Growing the company in those earlier years hinged largely on building out its management company, says Rijos, who intends to execute a similar strategy and practices in expanding CPF.
“Culture is a natural part of the business plan,” he says. “What we’re doing here, we plan on repeating from the first five years of Brookdale.”
With visions of replicating some of the early best practices at Brookdale, the fund will be the first of many as CPF looks to match its platform with a long-term view of the favorable demographics and fundamentals of the senior living landscape.
That strategy in mind, the private equity group recently purchased a majority interest in Minneapolis-based Grace Management, Inc., a company with 30 years of experience in the senior living industry that currently is managing 23 communities nationwide. The details of the transaction were not disclosed.
Grace is the likely management platform for the targeted CPF acquisitions, however, CPF is also interested in acquiring additional management companies on a very select basis, its leadership says. Communities will be sub-branded CPF Living Communities.
The firm has already made its first two acquisitions, a 76-unit independent living community in Belleville, Ill. and a 116-unit independent living community in Las Vegas, both of which were acquired from Wilmette, Illinois-based Cerulean Partners for an undisclosed amount. Both communities still have significant upside potential, Rijos says, with occupancy and rent growth and the addition of new assisted living units. Rick Shamberg, a consultant for both CPF and Grace Management and a partner at Cerulean, played an instrumental role in working with Rijos and Grace to put the deals together. Shamberg also intends to play a key role in working with CPF and Grace going forward.
The company’s focus will be on acquiring existing, undervalued senior living communities, but will also look to renovate and re-develop existing stock, and partner with highly credible developers to build from the ground up and leverage Grace’s expertise in managing new developments.
To start, it’s taking advantage of a specific phenomenon in senior living occurring right now: the free flowing capital and lack of experience that new entrants are bringing to the market.
“There’s private equity that’s coming into senior living—in some cases it’s smart money, but mostly its uninformed money from [investors] living on the deal cycle that don’t have a deep understanding of the business,” Rijos says.
Aside from senior living interests, CPF is also looking to spend a third of its fund investing in addiction recovery treatment centers, an area where the firm sees similar fragmentation characteristics and mom & pop operator presence as senior living. The group also plans to use a portion of its fund to invest in health care services such as physician groups and other private groups of providers.
“Our deal flow and pipeline is going to be more robust than most,” Rijos says. “We have a talented management platform and certainly a substantial amount of capital. Those together, along with our pipeline, are going to give us an advantage over other private equity [firms] that only have one or two of those components.”***
- Gill Group plans to attend the National Leased Housing Associations (NLHA) Fall Seminar October 16th – 17th in Washington, DC.
- Gill Group plans to attend the National Association of Housing and Redevelopment Official’s (NAHRO) Annual Conference October 16th – 18th in Baltimore, MD.
- Cash Gill attended the Missouri Real Estate Appraisers Commission’s Quarterly Meeting as an Active Commissioner September 16th – 17th in Jefferson City, MO.
- Gill Group attended the National Housing & Rehabilitation Association's Summer Institute August 16th - 17th in Newport, RI.
- Gill Group attended the Southeastern Affordable Housing Management Associations Regional Conference for Affordable Housing August 10th - 12th in Ft. Lauderdale, FL.
- Cash Gill gave a lecture on Rent Comparability Studies
- Gill Group attended the Midwest Buyers/Sellers Conference August 18th - 19th in Indianapolis, IN.
- Cash Gill gave a lecture on Appraisals and CNAs
- Gill Group provided RAD and Affordable Housing Training July 29th - 30th in Alexandria, LA.
- Cash Gill gave a lecture on Appraisals, Market Studies, Rent Comparability Studies and Capital Needs Assessments (CNAs)
- Gill Group attended the Texas Affiliation of Affordable Housing Providers' Annual Conference July 28th - 30th in Austin, TX.
- Jerry Anderson presented on the "Rental Assistance Demonstration" panel
- Gill Group attended the National Council of State Housing Agencies’ Annual Housing Credit Connect June 25th – 27th in Chicago, IL.
- Cash Gill presented on a panel on Thursday, June 26th, entitled “Rural Development Opportunities.”
- Jerry Anderson presented on a panel on Thursday, June 26th, entitled “RAD Report.”
- Cash Gill attended the Missouri Real Estate Appraisers Commission’s Quarterly Meeting as an Active Commissioner June 17th – 18th in Jefferson City, MO.
- Gill Group attended National Association of Housing and Redevelopment Officials’ Annual Conference June 16th – 17th in Orlando, FL.
- Cash Gill presented on a panel on Monday, June 16th, entitled “Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies.”
- Gill Group attended HUD’s RAD Training June 4th – 5th in Washington, DC.
- Gill Group provided affordable housing and RAD training at Great Lakes Capital Fund’s University of Affordable Housing May 22nd in South Bend, IN.
- Gill Group attended the Council for Rural Housing & Development of Ohio’s Midwest Rural Housing Summit May 19th – 20th in Columbus, OH.
- Cash Gill spoke on the Rural Housing Market Research panel on May 20th.
- Gill Group provided affordable housing training at a regional seminar April 29th in Franklin, TN.
- Gill Group attended Bank of Advance’s Annual Retreat and Meeting March 20th – 22nd in Norfolk, AR.
- Cash Gill attended the Missouri Real Estate Appraisers Commission’s Quarterly Meeting as an Active Commission March 18th – 20th in Jefferson City, MO.
- Gill Group attended MACO’s Annual Retreat and Meeting March 13th – 16th in Biloxi, MS.
- Gill Group attended the National Housing and Rehabilitation Association’s (NH&RA’s) Annual Meeting February 19th – 22nd in Palm Beach, FL
- Gill Group attended the Council for Affordable Rural Housing’s (CARH’s) Mid-Year Meeting January 26th – 28th in Las Vegas, NV.
- Gill Group attended 22 conferences and meetings throughout the United States in 2013
GROWTH (2013 - Highlights):
- Gill Group expanded our cutting-edge market analysis software and added our own in-house developed needs assessment software for CNAs, PNAs, PCNAs, PCAs, RPCAs, and every other acronym for this type of service.
- Gill Group added 4 offices with appraisers, market analysts, engineers and architects.
- Within the offices are three architects, one MAI appraiser, two general certified appraisers, five market analysts and 10 additional support staff.
- Gill Group expanded the footprint of its subsidiary, National Title & Escrow, to cover the entire United States with a local presence.
- Gill Group attended 20 conferences and meetings throughout the United States in 2012
GROWTH (2012 - Highlights):
- Gill Group developed cutting-edge market analysis software that will allow us to do preliminary analysis that is subject-specific in any market in the United States within minutes.
- Gill Group added 11 offices with appraisers, market analysts, engineers and architects.
- The offices now employ an additional 34 people.
- Gill Group expanded coverage of its subsidiary, National Title & Escrow, to cover the entire United States.
- Gill Group expanded coverage of its subsidiary, Gill Insurance Group, to cover the entire United States.
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
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
*as seen on housingfinance.com
**as seen on multifamilybiz.com
***as seen on seniorhousingnews.com