INDUSTRY NEWS

 

 

President Signs Omnibus Legislation into Law, Increases for HUD, LIHTC Improvements

Recently, President Trump signed into law the 2018 omnibus spending bill (HR 1625). Bill language was released late Wednesday night and the House of Representatives and Senate subsequently passed the bill on Thursday. The news of passage comes shortly after President Trump threatened via Twitter to veto the bill on Friday morning. The bill will fund the Federal Government for the remainder of the 2018 fiscal year and comes after several stopgap funding measures.

 

What’s In the Bill:

Low Income Housing Tax Credit

The LIHTC received some improvements adopted from the Cantwell-Hatch Affordable Housing Credit Improvement Act:

  • Allocation Increase: A 12.5 percent increase in Housing Credit allocation for four years (2018-2021)
  • Income Averaging: The income averaging option allows projects to accept tenants with higher average median incomes as long as the overall average of tenants in the project does not exceed 60% AMI. This will allow for LIHTC projects to serve a greater range of incomes.

Unfortunately, a provision creating a fixed 4% floor for tax-exempt bond financed projects was not included.

HUD

At $42.7 billion, HUD sees a 10% funding increase over Fiscal Year 2017. That’s in stark contrast to President Trump’s proposed 19% cut to the Department and exceeds proposals from both the House and Senate sub-committee markups (a 4% increase in the Senate and a 1% cut in the House). The increased numbers stem from last month’s bipartisan budget agreement.

The Rental Assistance Demonstration (RAD) program sees an increased cap from 225,000 units to 455,000 units as well as extended authority to cover PRAC. Detailed funding numbers for specific HUD programs can be found in the chart found here: https://www.housingonline.com/2018/03/22/house-passes-omnibus-lihtc-improved-hud-receives-10-increase/.*

 

___

GAO Finding: HUD Should Improve RAD Program Metrics

The U.S. Government Accountability Office (GAO) released a report in February examining HUD’s oversight and performance metrics of the Rental Assistance Demonstration (RAD) program, a program created for conversion of public housing properties. HUD is required by statute to report on private-sector leveraging for the program, but GAO finds that HUD’s private-sector performance metric counts several public resources as private-sector investment. The GAO report also finds that HUD lacks systematic processes to track the effects RAD conversions have on households. While certain safeguards, such as a tenants’ right to return to a property, are monitored by HUD, the Department has not put in place systematic review for other safeguards.

GAO makes five recommendations in the report, all of which HUD agreed with. The recommendations all relate to either improving leveraging metrics, monitoring enforcement of resident safeguards, and RAD compliance monitoring.*

 

___

Carson Testifies at Senate Banking Committee HUD Oversight Hearing

At the end of March, HUD Secretary Ben Carson testified at a Senate Committee on Banking, Housing, and Urban Affairs hearing titled “Oversight at HUD” and responded to questions regarding HUD’s Fiscal Year (FY) 2019 budget and rent reform proposals, recent actions on fair housing, and oversight at the agency.

Echoing much of his testimony at a House Appropriations Subcommittee hearing earlier that week, Carson defended HUD’s FY 2019 budget and rent reform proposals, encouraged self-sufficiency for low-income households, and suggested that the recently established Opportunity Zones program could serve in place of HUD programs the Administration has slated for elimination, including the HOME Investment Partnerships Program (HOME).

Secretary Carson also spoke about HUD’s Section 3 Economic Opportunities program, suggesting that HUD will enhance the program and “put teeth” into it but provided no further clarification. NCSHA understands from other sources that HUD intends to publish a new proposed Section 3 rule in the coming months.

During the hearing, Ranking Member Sherrod Brown (D-OH) sharply criticized the Administration’s proposal to reduce HUD’s budget and impose rent increases on vulnerable households. Brown also expressed his concern that HUD had experienced “one controversy after another” under Carson’s leadership, and went so far in his opening testimony to question whether he had made a mistake in voting in favor of the Secretary’s nomination last year.

Other Committee members asked Carson about specific program cuts. Senator Thom Tillis (R-NC) called the funding reductions “premature,” saying that the agency needed level or perhaps increased funding, and encouraged Carson to assess the effectiveness of programs before cutting them. Senator Doug Jones (D-AL) questioned Secretary Carson’s logic that the Opportunity Zones program would be an adequate alternative to HUD programs, especially in poor, rural communities like those in his home state.

Committee members also asked Secretary Carson about several actions HUD has recently taken regarding fair housing. Carson defended HUD’s decision earlier this year to suspend implementation of the Affirmatively Furthering Fair Housing (AFFH) rule, adding that the decision came after municipalities complained about compliance costs. He also rejected any assertions that proposed changes to HUD’s mission statement deleting language related to creating “inclusive and sustainable communities free from discrimination” suggested an intent to ignore the agency’s statutory fair housing obligations. Finally, Senator Catherine Cortez Masto (D-NV) brought to the Committee’s attention that HUD has still not responded to a July 2017 letter she and 28 other Senators sent requesting that HUD reinstate guidance that protects LGBTQ people from housing discrimination. Carson acknowledged the letter and said the delay was because the Senate had not confirmed HUD’s General Counsel until December 2017.**

 

___

Transactions & Financings in Senior Housing

Welltower Acquires CCRC in Florida for $130 Million

Toledo, Ohio-based health care real estate investment trust (REIT) Welltower, Inc. (NYSE: WELL) has officially acquired Stratford Court of Boca Pointe, a 527-bed continuing care retirement community (CCRC) in Boca Raton, Florida, for $130 million, according to the South Florida Business Journal.

The seller was Newton, Massachusetts-based REIT Senior Housing Properties Trust (Nasdaq: SNH).

Specifically, SPTMRT Properties Trust, an affiliate of Senior Housing Properties Trust, sold the property to Welltower Jefferson Propco TRS, a subsidiary of Welltower. In January, Welltower announced plans to purchase four CCRCs from Senior Housing Properties Trust for $368 million.

Stratford Court is currently operated by McLean, Virginia-based Sunrise Senior Living.

 

Radiant Senior Living Buys Memory Care Community in Nevada

Radiant Senior Living recently acquired the Arbors Memory Care community in Sparks, Nevada, for an undisclosed price.

Portland, Oregon-based Radiant, which was founded 2010, currently owns and operates 18 assisted living and memory care communities in Washington, Oregon, Montana, Colorado, and now, Nevada.

 

MidCap Closes Loan for Acquisition of Senior Living Community 
Commercial finance firm MidCap Financial recently closed a transaction with Palatine Capital Partners Management, LLC, a principal investment company that concentrates on small and mid-cap real estate assets.

The approximately $9 million floating rate first mortgage loan facilitated the purchase of a purpose-built, 145-unit assisted living and independent living community in the Southwestern U.S. The financing will allow Palatine to implement a $2.5 million capital improvement plan to renovate the community’s exteriors, unit interiors and common areas.

 

Ziegler Closes $14.7 Million Portfolio of HUD Refinancings in California  

Chicago-based speciality investment bank Ziegler recently announced the successful closing of $14.7 million of senior living refinancing transactions via the Section 232/223(a)(7) HUD Mortgage Insurance Program by Ziegler Financing Corporation (ZFC), the FHA-insured mortgage lending arm of Ziegler.

Oakdale Heights of Redding, a 60-unit standalone assisted living community, and Sierra Oaks of Redding, an 85-unit assisted living and memory care campus, are both located in Redding, California. The communities had about $14.1 million in outstanding Section 232/223(f) HUD mortgages that were originally financed in 2014 at interest rates in the mid-4s by a different HUD lender.

ZFC recommended refinancing the existing debt under HUD’s Section 232/223(a)(7) program to enable both assets to lower their debt service by locking low, long-term fixed interest rates while at the same time extending the maturities of the loans to 35 years. 

 

Blueprint Arranges Sale of Two Arizona Assisted Living Communities

Blueprint recently announced the successful sale of a 50-unit assisted living community in Peoria, Arizona that had been vacant since 2008, as well as the sale of a 50-unit assisted living community in Mesa, Arizona, that had been vacant since 2013.

The seller of both properties was looking to divest. A different buyer purchased each community.

The buyer of the Peoria community is an established regional owner-operator, according to Blueprint. The buyer of the Mesa property is a growing behavioral group that plans to transform the asset into a drug treatment center. 

Blueprint’s Amy Sitzman handled both transactions.

 

Ziegler Closes $94.3 Million Refinancing of Board & Care Community in Florida

Chicago-based specialty investment bank Ziegler recently announced the closing of the $94.34 million refinancing of a not-for-profit client in Florida—the Village at Gainesville—by Ziegler Financing Corporation (ZFC), the FHA-insured mortgage lending arm of Ziegler.

The loan represented the largest refinance of a single-asset senior housing community in HUD’s portfolio.

 The Village at Gainesville has 639 units, 511 of which are unlicensed independent/board and care and 128 of which are licensed assisted living/memory care. 
 Specifically, ZFC recommended refinancing the outstanding tax-exempt bonds with the FHA Section 232/223(f) program to enable the community to lower its debt service by locking in a 35-year, fixed interest rate of less than 3.5%. 

 

Blueprint Arranges $19 Million Sale of Senior Living Community in California

Blueprint recently announced the $19 million sale of Healdsburg Senior Living Community, a 110-unit assisted living, memory care and skilled nursing community in Sonoma County, California.

The name of the buyer was not disclosed, though the buyer was identified in a global private real estate investment company with a large national senior housing portfolio, according to Blueprint.

The transaction was led by Blueprint’s Christopher Hyldahl and Mario Wilson.

 

Cushman & Wakefield Arranges Sale of 115-Unit Senior Housing Community in Oregon

Cushman & Wakefield Senior Housing Capital Markets recently arranged the sale of Quail Park of Klamath Falls, a 115-unit independent living, assisted living and memory care community in Klamath Falls, Oregon. The buyer was Irvine, California-based MBK Senior Living, which will now manage the community.

The purchase price was undisclosed.

Cushman & Wakefield exclusively represents senior housing developer Morningside Development and West Coast-based senior housing owner and operator Living Care Lifestyles, and both companies were involved in this specific transaction.

The Cushman & Wakefield team involved in the deal included Executive Managing Director Richard Swartz, Senior Director Aaron Rosenzweig, Executive Director Jay Wagner and Associate Caryn Donahue.

 

ESI Arranges $14.5 Million Sale of Senior Housing Community in South Carolina

Evans Senior Investments (ESI) recently arranged the $14.5 million sale of The Willows of Easley, a 100-unit independent and assisted living community in Easley, South Carolina. The seller was an independent owner/operator, and the buyer was a private equity firm based in Chicago.

At the time of the sale, The Willows averaged 96.1% occupancy, was  100% private pay and posted a 35.8% EBITDAR margin in the trailing 12-month period.***

 

___

COMPANY NEWS:

 

Events (2018)

 

·        Gill Group plans to attend Gill Group, Inc.’s and National Title & Escrow’s First Annual Corporate Retreat, April 12th – 15th in Norfork, AR. 

·        Gill Group attended the Mississippi Annual Affordable Housing Conference, March 27th – 29th in Biloxi, MS. 

·        Gill Group attended the National Housing & Rehabilitation Association’s Annual Meeting, February 21st – 25th in Palm Beach, FL. 

o   Cash Gill spoke on a panel on Wednesday, February 21st entitled “Rent & Revenue Management Strategies” along with Robyn Eaton (Herman & Kittle Properties, Inc.), Doug Koch (Dauby O’Connor & Zaleski, LLC), Monica Sussman (Nixon Peabody LLP) and Jeff Woda (The Woda Group, Inc.).

·        Gill Group attended the Council for Affordable Rural Housing’s (CARH’s) Midyear Meeting, January 22nd – 24th in Napa, CA. 

o   Cash Gill spoke on a panel on Tuesday, January 23rd entitled “Finding Equity in a Haystack” along with C.B. Alonso (Director of Multi-Family Housing/Preservation and Direct Loan Division with Rural Development), Don Beaty (The Summit Group), Campbell Brown (Greystone Affordable Development) and Karl Edmonson (Bellwether Enterprise).

 

Events (2017)

·        In 2017, Gill Group attended and sponsored meetings and conferences across the entire United States.

  • Several members of Gill Group also spoke on panels at the largest events in in the country and published articles regarding appraisals, market studies, and other due diligence pieces needed for affordable housing transactions.
  • Cash Gill, of Gill Group, gave a training session to the staff at MFA (New Mexico’s HFA) to further their knowledge on appraisal and market study processes in Albuquerque, NM.

 

GROWTH (2017 - Highlights):

  • Gill Group added over dozens of 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), expanded their client base substantially and used their new underwriters (Fidelity National Title Insurance Company and Stewart Title Guaranty Company) to ensure that the clients were very satisfied and had all of their needs met.

 

  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
  • (Albuquerque, NM) MFA – Appraisals 101 (personal training for HFA staff)
  • (Atlanta, GA) NCSHA – Using Market Studies to Inform Site Selection
  • (Napa, CA) – Finding Equity in a Haystack
  • (West Palm Beach, FL) – Rent and Revenue Management Strategies

**as seen on housingfinance.com

**as seen on NCSHA.org

***as seen on seniorhousingnews.com