Gill Group, Greystone Form Joint Venture to Service RAD Deals

Gill Group and Greystone have formed a joint venture to provide a full line of consulting and development services for Rental Assistance Demonstration (RAD) transactions.

RAD is the centerpiece of HUD’s strategy to preserve at-risk public and assisted-housing developments.  

“Housing authorities across the nation are at a critical crossroads in that their properties are rapidly deteriorating and available capital for improvements is at a minimum,” said Jerry Anderson, executive vice president of Gill Group. “The RAD conversion is an ideal solution for this, but it can be an incredibly complex process to navigate, so we want to educate local housing authorities on their options.”

Anderson is the former associate deputy assistant secretary of the Office of Affordable Housing Preservation at HUD and was instrumental in the development of RAD.

Gill Group provides nationwide commercial and multifamily consulting services and third-party due diligence pieces such as valuations, market feasibility analyses, capital needs assessments, environmental assessments, and title insurance on a nationwide platform.

Greystone’s experienced team has preserved more than 6,000 affordable housing units as both financial adviser and developer. The firm is a financial services and private investment group. It is active in three major business segments: mortgage finance, health care, and real estate.

“We are incredibly excited to embark on this RAD advisory service and believe Greystone’s unique position in the market as a leading developer, advisor, and lender will prove to be invaluable to the many housing authorities that are on the cusp of a RAD conversion,” said Tanya Eastwood, head of Greystone’s affordable housing preservation group. “It’s a positive step for the authorities but more importantly the residents of these affordable housing communities, who will most certainly benefit from the financial and physical improvements for years to come.”


QAP Updates Across the Nation


The Iowa Finance Authority (IFA) is preparing a draft of the 2016 Qualified Allocation Plan (QAP), and in lieu of holding a public forum meeting, is soliciting your input via email. It is IFA’s intention to formulate the 2016 QAP similarly to the 2015 QAP. Any comments are appreciated, but specifically, IFA is soliciting feedback on the following areas:

A set-aside for projects addressing the needs of tenants that are hard to house.

Unit cost cap limits and construction costs.

Developer Experience, Developer Fees and Owner cash contributions.

Location near services – types of services and alternative methods of defining the distance.

Medical Alert System

Local government contribution and local support.

Please send responses to the Housing Tax Credit team by 4:30 p.m. on Friday, May 8, 2015. The following is IFA’s approximate timeline for the 2016 QAP:

July – Draft 2016 QAP approved by the IFA Board

August – Public comment period (min. 20 days) and Public Hearing

September – IFA reviews comments and develops final QAP

October – Final 2016 QAP approved by the IFA Board


Kentucky Housing Corporation (KHC) has released the 2015 Application Guidelines for the HOME Investment Partnerships Program (HOME) for Tenant Based Rental Assistance activities (TBRA). The 2015 Application Guidelines are available on KHC’s website, under Development, Single-Family, HOME Tenant-Based Rental Assistance (TBRA).

Ohio Capital Corporation for Housing (OCCH) Training Academy will be providing a one-day training on Tuesday, June 16, 2015, at Liberty Green in Louisville, Kentucky, from 10 a.m.-4 p.m ET. The training targets property management companies that are responsible for maintaining compliance with the Low Income Housing Tax Credit (LIHTC) Program. The cost of the training is free, but there is a $10 cost for a box lunch. The training will cover the following topics:

The Value of the Credit

Qualifying Households

Unit and Project Requirements

On-going Compliance Requirements

Monitoring Compliance

8823-Report of Non-Compliance

For more information, please see the event flier. You may also contact OCCH’s Lynn Logan at 614-224-8446 or email



The Michigan State Housing Development Authority (MSHDA) announced the fifth round for the Gap Financing Program NOFA. The Gap Financing Program NOFA is designed to improve MSHDA’s direct-lending production by making available approximately $18 million in gap funding. This funding is being made available exclusively for MSHDA’s Tax Exempt – 4% Low Income Housing Tax Credit direct lending transactions. The updated Program Statement is available on our website at:,4641,7-141-5587_5589—,00.html. The first phase of the application is due by the August 3, 2015 funding round deadline. Questions: Any questions about this notice and update may be directed to John Hundt, Housing Development Manager, Rental Development Division, at or 517-241-7207.

New Jersey

The New Jersey Housing and Mortgage Finance Agency announced the 2015 Unified Application for HMRA Multifamily Rental Housing Production Programs is now available to be downloaded for all Agency funding. The deadline to submit applications for the 9% Tax Credit round are as follows:

Family, Senior and Supportive Housing Cycles: Noon on July 24, 2015

Mixed Income Reserve: Rolling from June 29th until Noon on August 20th, 2015

Any current Tax Credit owners planning to submit applications for the 2015 9% Tax Credit round are advised to contact their Compliance Analyst to verify there are no uncorrected noncompliance issues with current properties. Please view our Compliance Analyst list (61k PDF) for contact information. For any further questions, please contact the Tax Credit division at 609-278-7629.


OHFA released preliminary reviews of the 2015 Housing Tax Credit Proposal Round (both scores and underwriting reviews) on Thursday, April 23. Applicants have two weeks to review the information and address issues identified. Responses must be received by OHFA no later than 5:00 PM on Thursday, May 7, 2015. Since preliminary results were released early, applicants with compelling reasons to request additional time to respond should contact Karen Banyai, Operations Manager, at 614-752-4185 or

West Virginia

The West Virginia Housing Development Fund requests 2014 Year End Financial Audits from LIHTCP property owners in the state for each LIHTCP property they own.  If your property is not required to have an annual audit, the Fund will accept an accountant’s compilation of the property’s financial statements.  You may email, fax, or mail (on paper or CD) the financials to Hazel Mead, Tax Credit Processor at, phone: 304-391-8675, or fax: 304-391-8780. Please submit them by Thursday, April 30, 2015.


Wisconsin Housing and Economic Development Authority awarded $12.5 million in low-income housing tax credits (LIHTCs) to fund 25 affordable housing developments. WHEDA received 51 applications with nearly $28 million in requests for the 2015 LIHTC round. To view the full list of awards, click here.*


Freddie Mac Reaches $100 Billion Milestone

Freddie Mac Multifamily announced a significant milestone, it has securitized more than $100 billion of multifamily mortgages through its innovative K-Deal program. By laying off the vast majority of the expected credit losses of the underlying loans to private capital markets, K-Deals reduce the company's credit exposure and taxpayer risk.

Freddie Mac launched the K-Deal program in 2009 with the goal of making it scalable with regular issuance. Since then the company has issued more than $100 billion through 80 K-Deals. Over time, the K-Deal program has grown to include various types of transactions, including five-, seven-, and 10-year term loans; floating-rate loans; single borrower loans; legacy portfolio loans; and seniors, student, military and targeted affordable housing loans.

The K-Deal has been integral to Multifamily's strategy to shift its business model from a "buy and hold" company to a "buy and sell" company. Freddie Mac achieved those goals and now securitizes about 90 percent of its multifamily mortgages purchases, the majority of which are backed by apartment communities with affordable rents.

"In 2008 when we first started talking to investors about doing a CMBS-style securitization, some of them thought we were crazy. The CMBS market had collapsed due to the financial crisis. We ended up helping to revive the market through our K-Deal issuance. Today we are one of, if not the largest, issuer of commercial mortgage credit in U.S. structured finance."

"When the program began we had to convince lenders that selling a loan to us for securitization was better, or at least not significantly worse, than selling us a loan that we would hold in our portfolio. Offering significantly better pricing for loans intended for securitization and redefining the securitized-loan servicing standard helped to convince them that it made sense."

"Our original goal was to get to a point where we would do one K-Deal a month. Since 2011, we've done one every two to three weeks. They are underwritten, structured and priced in-house and our credit performance has not changed during that time. We have very low delinquencies and credit losses with about 1 basis point of loss on K-Deal securities issued to date."

"We knew K-Deals were successful when:

K-Deals were added to the Barclay's Index last year. It was like being added to the S&P and asked to join an exclusive club.

A single investor placed a half billion dollar order for a new deal. Today, that is common.

Our 10-year floating rate offering priced like a 7-year offering.

We did our first single sponsor deal for Spring Creek Towers (formerly named Starrett City) and then for one of our largest borrowers, AIMCO."

Freddie Mac's approach to securitizing mortgage loans backed by multifamily apartment properties nationwide helps to keep rental housing affordable, while attracting private capital to the market and minimizing U.S. taxpayers' exposure to credit risk. Through our approach to buying mortgages and securitizing them via the K-Deal structure, Freddie Mac Multifamily transfers the overwhelming majority of the credit risk to private investors. Our guarantee acts as catastrophic insurance and would be called on only in the most extreme cases where losses exceed the unguaranteed amounts of the securities.

Each security issuance is considered a true sale where the underlying loans come off of Freddie Mac's balance sheet. This allows Freddie Mac to reuse the funds from the sale to buy new mortgage loans. With the money that lenders receive, they can make mortgage loans to other qualified borrowers. This capability is unique in the GSE world to Freddie Mac Multifamily.**


Distressed Deals Present Growing Opportunity for Senior Living Buyers

Mid-sized senior living providers that are looking to grow have opted to build rather than buy lately, in part because they’ve been priced out of the acquisition market. But these operators soon could be seeing more opportunities to expand their footprints by purchasing — if they’re willing and able to navigate the more complex types of deals around distressed properties.

Financial distress is increasing in the health care sector — including senior housing — even as bankruptcies have fallen sharply across U.S. industries as a whole, attorney Bobby Guy, a shareholder in the health care practice at Kansas City, Missouri-based firm Polsinelli, tells SHN.

While acquiring these properties has historically been the province of a relatively small “distress community,” they present a “significant strategic opportunity” that should not be overlooked by the development departments of senior living operators, including smaller players, Guy says.

Health care reform and market forces make it likely that financial distress will continue to increase in the seniors housing space, so providers looking to grow through acquisitions could see a more inviting playing field, experts tell SHN. The takeaway? Now is the time to develop the right skills for this game.

Winners and losers

The fact that financial distress is on the rise in seniors housing is not a secret. Guy’s former firm, Frost Brown Todd, has published a “Distress Index” showing the development of this trend over the past three quarters.

The latest edition of the Index, for the fourth quarter of 2014, showed that Chapter 11 filings in the health care services sector continued on an upward trend. Among all Index-measured Chapter 11 filings, health care filings increased from 1.1% in 2010 to 3.8% in the latest report.

“We have not made a determination yet as to the causes of why the health care index is climbing,” he explains.

However, he notes that the industry is seeing sweeping changes and increased pressures, both legal and competitive, due to a variety of factors. These include the Affordable Care Act and the evolution of health care technologies.

Providers that can adapt to these changes — such as by partnering with larger health systems — are emerging as winners, while the losers may be struggling financially and ultimately entering Chapter 11, Guy surmises.

The health care services part of the index includes hospitals as well as senior care settings, and Frost Brown Todd has not broken out those individual sectors. However, it is likely that a “fairly high percentage” of the bankruptcy filings come from across the spectrum of seniors housing, Guy says.

Continuing care retirement communities in particular continue to face financial distress challenges, which they’ve encountered ever since the economic crisis made it difficult for prospective residents to tap into their home equity to pay for high entrance fees, says Louis E. Robichaux, principal at consulting firm Deloitte Transactions and Business Analytics LLP.

Although Robichaux believes the market may be returning for CCRCs, for years they have had to pursue creative strategies to avoid bankruptcy.

Skilled nursing facilities also are facing performance challenges as they try to adapt to a post-ACA world, Robichaux says. He does not see financial distress or bankruptcy as a particular issue for assisted living providers.

However, given that health care reform aims to more closely align providers across the whole continuum of care, it’s likely that every type of provider will need to make changes — or face potentially unsustainable balance sheets.

“We would anticipate some uptick [in bankruptcies] across the seniors housing market as the change separates the winners from the losers,” Guy explains.

A REIT end-run

As a senior living provider nears or enters bankruptcy, it becomes an acquisition prospect — so more providers in Chapter 11 or heading that way means more potential targets for buyers.

“Chapter 11 is always an acquisition opportunity,” Guy says.

In particular, these properties could be ripe for the picking for the smaller and mid-sized operators and owners that have not been able to compete with large-cap real estate investment trusts (REITs) in terms of acquisitions, as per-unit prices in seniors housing have reached such high levels that it has led to talk of a bubble.

“Distressed, underperforming properties that may or may not be on the verge of bankruptcy are not attractive to the REITs and funds going after stabilized [properties],” says Rick Shamberg, co-managing partner of Cerulean Partners, a venture capital-backed real estate investment firm specializing in acquiring and developing undervalued senior living properties. He also is a consultant to both private equity firm Chicago Pacific Founders and senior living developer Grace Management.

While even Fortune 500-size companies go after distressed properties, Guy also emphasizes that “there’s a pricing opportunity” there for mid-market buyers. However, there’s still plenty of reason to proceed with caution, he advises.

High risk, high reward

Acquiring a distressed property is not to be undertaken lightly, Guy, Robichaux and Shamberg agree.

“Distressed health care acquisitions are highly specialized,” Guys says. “It’s not everyone’s cup of tea.”

To execute this type of deal and come out a winner demands due diligence, he emphasizes. This stands to reason — the property mostly likely was distressed for a number of reasons and these may not all be revealed without some digging. For example, financials may be inaccurate, as sellers sometimes believe they own items they don’t, and liabilities that they believed were small actually turn out to be much larger.

There also could be legal issues behind a bankruptcy. Take the case of California-based North American Health Care, a skilled nursing operator which has sought Chapter 11 protection due to being faced with multiple quality of care lawsuits. Its bankruptcy attracted attention from The New York Times.

Some suggest that providers such as North American Health Care are subpar operators taking advantage of Chapter 11 to escape legal consequences and sell off buildings, while others argue that this is not a new or underhanded tactic, and that it may represent a responsible strategy to preserve as much value as possible for stakeholders in the enterprise.

Bankruptcy also is a public process, so properties that actually have entered Chapter 11 go through a public bidding process. This means that an organization could sink significant resources on the potential acquisition and still not come away with the prize, Guy notes.

“Medicare has become more strict on forcing a buyer to take all of the exposure when you transfer … you get all the liabilities, if there were civil money penalties or overpayments to repay,” Robichaux adds. “There are only so many things you can do in bankruptcy to scrub those things off.”

Being strategic about which opportunities to pursue is essential, Shamberg says. There are multiple variables to consider when determining whether a distressed property can be turned around.

“You’ve got to be thoughtful about the property’s location and unit mix, ask if it’s functionally obsolete, think about how much capital expenditure it is going to take to make it competitive in the marketplace,” he says.

Even after weighing all these factors, there’s not a surefire formula for success.

“It’s an art more than science,” Shamberg says. “You’ve got to look at each project as its own animal.”

Despite these challenges, there’s a reason why this type of acquisition remains attractive: The potential rewards justify the risks.

First, buyers are afforded certain valuable legal protections if they are acquiring a Chapter 11 property, Guy explains. For example, the buyer may be able to pick and choose contracts it wants to retain. The buyer also generally does not have legal successor liability, which means that the creditors of the distressed seller cannot come after the buyer for debts owed.

And then there’s the return on investment if the property can be turned around.

“In an ideal case, you buy something for $5 million, put $2 million in, you’re all in for say $7 million, you fill it up, raise the rates, put a new name on it, come to market with a fresh concept and energy, and three to five years later you’ve got a $12 million building,” Shamberg says, offering ballpark figures that he believes are reasonable for the current market. “That’s a really nice return.”

At that point, the building becomes attractive to the REIT or private equity market, he notes.

“I’ve seen assets that were financially challenged, highly difficult assets for the seller become the flagship asset in the portfolio of the buyer,” Guy says.

Considering this potential, these types of deals could — and perhaps should — be appealing to a wider pool of buyers.

“Distressed health care acquisitions are a specialized area, but are not only for a small cadre of players,” Guy says. “They’re a growth opportunity for many operators in the industry, but they need to go in prepared, with eyes wide open.”***



Events (2015)

  • Gill Group plans to attend the National Council of State Housing Agencies’ (NCSHA) Housing Credit Connect June 1st – 4th in Los Angeles, CA.
    • Cash Gill will be speaking on a panel Wednesday, June 3rd entitled “Successful Development in Challenging Markets” on June 3rd.
  • Gill Group plans to attend the Middle Atlantic Regional Council of the National Association of Housing and Redevelopment Officials’ (MARC NAHRO) Spring Conference May 19th – 22nd in Ocean Springs, MD.
  • Gill Group attended the Tennessee Association of Housing and Redevelopment Authorities’ (TAHRA) Spring Workshop April 20th – 22nd in Murfreesboro, TN.
    • Cash Gill presented a session Tuesday, April 21st entitled “Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies for RAD and LIHTC Transactions”
  • Cash Gill attended the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting April 15th – 16th in Jefferson City, MO.
  • Gill Group attended Bank of Advance’s Annual Meeting March 19th – 22nd in Norfork, AR.
  • Gill Group attended the Maco Companies’ Annual Meeting March 12th – 15th in Biloxi, MS.
  • Gill Group attended the Council for Affordable Rural Housing’s Quarterly Board Meeting March 4th – 5th in Washington, DC.
  • Gill Group attended Mississippi’s Annual Affordable Housing Conference February 23rd – 25th in Natchez, MS.
  • Gill Group attended NH&RA’s Annual Meeting February 18th – 20th in Key Largo, FL.
  • Gill Group attended CARH’s Midyear Meeting January 27th – 29th in St. Pete Beach, FL.
    • Cash Gill spoke on a panel Wednesday, January 28th entitled “Preservation Challenges and Opportunities”

Events (2014)

  • 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. 

Events (2013)

  • 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.

Events (2012)

  • 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
  • (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 (June 3, 2015)





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