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TCAM Provides Asset Management and Servicing for New Fund

BOSTON, MA – Today, TCAM announced a new engagement with Affordable Investment Advisors (AIA). AIA provides advisory, consulting and investment services to the Low-Income Housing Tax Credit (LIHTC) industry. TCAM is providing AIA with servicing and asset management services in connection with the loans and equity investments made under AIA’s Flex Finance Facility. The Flex Finance Facility provides predevelopment, acquisition, mezzanine, and cash out subordination debt or equity on properties restricted to tenants earning no more than 80% of median income.

AIA joins a growing list of owners, investors, lenders, housing finance agencies and authorities and guarantors for which TCAM is providing asset management and consulting services.

“AIA’s Flex Finance Facility is a unique product in the market and requires a specialized servicing and asset management solution,” said TCAM CEO Jenny Netzer. “We are excited to be working with our former MMA Financial colleagues on this new way of bringing capital to affordable housing.”

Since its formation in 2009, TCAM (www.tcamre.com) has provided asset management and consulting services to clients for over 800 properties including 120,000 apartment units in 46 states, Washington, D.C., and Puerto Rico, representing in excess of $5.5 billion of client capital. TCAM is owned by QuietStream Financial (http://quietstreamfinancial.com/). QuietStream Financial’s companies provide alternative asset management services and structured finance products for real estate borrowers, financial institutions and investors.

AIA (www.aia-lihtc.com) was founded in 2013 by Catherine Talbot, Greg Judge and Mike Caliva. All three partners spent their careers at one of the premier LIHTC syndication companies, Boston Financial Investment Management and its predecessor firms.

Learn more about these companies:

Asset Management, LIHTC, TCAM Services

Cash Flow Optimizers for Owners and Developers

Experienced owner/developers in today’s multifamily rental housing market, seeking to diversify their sources of revenue, are looking beyond development fees. As a result, owner/developers are focusing on maximizing the cash flow of their stabilized portfolios more than ever and some are turning to TCAM’s low-cost cash flow optimization services to achieve their goals.

 

Cash Flow Optimization

In addition to providing independent asset management and consulting services, TCAM provides a host of cash flow maximizing services to owner/developers including the following:

 

    • Portfolio assessment and recommendations on cash flow optimizing strategies;
    • Rent positioning advice and market analysis;
    • Analysis of Section 8 rent levels, real estate taxes, insurance and utilities including identifying alternative   lower-cost options or efficiencies and examining utility allowances; and
    • Disposition and refinancing due diligence, analysis and closing.

 

To learn more about how TCAM can help your organization maximize the cash flow of your portfolio, contact Steve Spall (sspall@tcamre.com) and Allen Feliz (afeliz@tcamre.com) — (617) 542-1200.
Asset Management, LIHTC, TCAM Services

Keys to Preparing for a LIHTC Re-syndication

As thousands of LIHTC properties reach Year 15 of the compliance period with physical needs and inadequate reserves to address them, growing interest among state allocating agencies in preservation and a continuing active tax credit market, re-syndication is an attractive option for owners.

 

The keys to preparing for a re-syndication for owners include the following:

  • Start Early (Year 11):

The re-syndication process is long and comprehensive. A re-syndication, or other recapitalization, often requires multiple approvals and coordination between one or more general partners, two or more lenders, investors and several regulatory bodies. In addition to likely changes to the operating partnership, the owner will have to apply for a new allocation of tax credits, possibly source new debt, and structure a transaction with a new equity investor. It can take years to accomplish all of these steps.  Aware of the investor’s inherent incentives, many tax credit developers start as early as Year 11 in preparing for a re-syndication.

 

  • Preserve Eligible Basis:

One of the most important steps owners should take in preparing a property for a re-syndication is to strategically reserve major capital improvements for the re-syndication in order to:

1) Meet minimum rehabilitation requirements for the new allocation of tax credits and to garner interest from an equity investor

2) Maximize eligible basis in order to obtain as much equity as possible.

Managing rehab costs is an important matter for a re-syndication not only for obtaining a tax credit award and finding an investor but also for maximizing the amount of equity that the project can receive.

 

  • Engage the Equity Investor:

Any organized and properly timed re-syndication process requires general partner and limited partner engagement. The primary motivation of most LIHTC investors is receiving the 10-year stream of tax credits (rather than investing in the underlying real estate). The investor generally wishes to exit the operating partnership upon achieving its main goal, and in many cases, it does not want to continue receiving the depreciation (losses) that stem from its ownership interest. Therefore, early discussions with the investor can be useful for general partners that are preparing for a re-syndication.

 

  • Understand the Governing Documents:

Owners pursuing a re-syndication should understand their options during partnership changes under the governing documents, particularly the property operating partnership agreement and the loan documents. Owners should review all governing documents and determine the rights of investors and the general partner with respect to re-syndication, which should establish the basis for negotiating with the limited partner and seeking approvals from lenders and regulatory agencies.

If you need assistance strategizing a Year 15 re-syndication, contact Steve Spall (sspall@tcamre.com) or Allen Feliz (afeliz@tcamre.com) — (617) 542-1200.

 

*Based on Preparing for a Post-Year 15 LIHTC Property Re-syndication: An Overview, originally published in the Tax Credit Advisor, June 2012.  http://www.housingonline.com/TaxCreditAdvisor.aspx

Consulting Services, TCAM News

TCAM Announces New Consulting Engagement

BOSTON, MA – Today, TCAM announced a new engagement working with an investor in Low-Income Housing Tax Credit assets. The investor has a large and growing portfolio of tax credit investments, including direct investments and interests in syndicated funds.

TCAM is helping the investor assess its equity asset management functions and develop options and recommendations for improvements. This new assignment involves evaluating the current asset management functions in light of the investor’s long-term goals, benchmarking processes and performance to industry standards and identifying areas where changes could improve efficiency, risk management and help the investor achieve its long-term goals.
“Many clients look to TCAM to provide asset management services, but some ask us to help them update or improve their internal processes,” said TCAM CEO Jenny Netzer. “All clients have different needs and TCAM can bring its expertise to bear in whatever way is most useful for the client.”

TCAM is currently working with a number of organizations to help them improve their operations. In addition to consulting services of this nature, TCAM provides asset management and transaction support services. TCAM’s services (www.tcamre.com) have helped dozens of clients and touched over 800 properties containing 120,000 apartment units in 46 states, Washington, D.C., and Puerto Rico, representing in excess of $5.5 billion of client capital. Clients include investors, owners, lenders, housing finance agencies and authorities and guarantors.

TCAM is owned by QuietStream Financial. QuietStream Financial’s companies provide alternative asset management services and structured finance products for real estate borrowers, financial institutions and investors.

Asset Management, Federal Housing Programs, Industry Conferences, LIHTC

Top 7 Takeaways from AHFLive!

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From November 20-22, over 900 developers, capital providers and other professionals in the affordable Housing industry met in Chicago for AHF Live: The 2013 Affordable Housing Developers’ Summit. The conference featured speeches and panel discussions from  the industry’s leading experts including HUD Secretary Shaun Donovan.

 

The Top 7 latest trends and other pertinent issues discussed at AHF Live included the following:

 

 

  1. The Rental Assistance Demonstration (RAD) program, which many, including Secretary Donovan agree represents the wave of the future for federal housing programs
  2. The potential impact of the consolidation of HUD offices; among other things, it may lead to greater asset management responsibilities for FHA lenders
  3. Continued uncertainty about decision-making on Capitol Hill and the likelihood of an approved federal budget, tax reform and restructuring of the GSEs
  4. LIHTC allocation policies across the nation in 2014–state allocators continue to grapple with cost containment
  5. The latest on the tax credit equity market including pricing, deal terms, recently approved accounting changes and hope of widening the investor base. The market continues to perform well with deals across most MSAs finding homes, but the market’s over-reliance on CRA-motivated investors is an ongoing concern
  6. Innovative strategies for preserving affordable housing–incl. making use of the mix of state and local funds and working with mission-oriented capital sources to obtain debt and equity
  7. Trends among housing developers including focusing more on extracting value from stabilized portfolios instead of relying solely on development fees for cash flow

To learn more about the latest trends in the affordable housing industry contact Steve Spall (sspall@tcamre.com) and Allen Feliz (afeliz@tcamre.com) — (617) 542-1200.

Federal Housing Programs, LIHTC

Renewed Hope for Attracting New Investors to the LIHTC Industry

Low-income housing tax credit (LIHTC) industry observers are hopeful that the recently announced accounting change will attract new investors to the market.

What is the change?

 

The Emerging Issues Task Force has unanimously voted to recommend an Accounting Standards Update for LIHTC investments to the full board of the FASB. It is anticipated that the Board will accept the recommendation at its next meeting in December, making the new guidance effective for the fiscal years ending after 12/15/14 with early adoption permitted.

 

The Task Force voted on the following:

 

  1. To reverse course on its preliminary conclusion that LIHTC investments be presented as deferred tax assets in the balance sheet, which would have been a negative outcome.
  2. To adopt proportional amortization as the new method of accounting with the amortization period tied to tax credits rather than all tax benefits. Equity accounting will continue to be the law for LIHTC investments that do not meet the four basic criteria and it will be a permissible method for investments that qualify if the investor choses it as an accounting policy method. Investments accounted made prior to adoption which satisfied the EITF 94-1 criteria can continue to be accounted for using the effective yield method.
  3. The ASU will provide that the proportional amortization period will be based solely on the expected tax credits. However, in cases where the pattern of benefits shows that there will be significant remaining benefits at the conclusion of the tax credit period, investors will be permitted to utilize a proportional amortization period which more nearly reflects the actual tax benefit period.
  4. To recommend expansion of the scope to “other tax credits” that meet the four requirements for the new accounting. However it became apparent that the full Board was likely to require re-exposure of the draft update if so expanded. As a result, the Task Force voted to recommend the new accounting solely for LIHTC and to recommend re-issuance of the draft ASU with respect to other credit investments that meet the criteria adopted for LIHTC investments. Task Force members and FASB board members are concerned about the potential conflict between tax credit investments that must be structured to demonstrate a profit motive and the new requirement that substantially all of the expected investment benefits must come from tax credits and tax losses.

It is too early to know whether this change will allow the tax credit industry to attract investment from companies that have previously not participated. However, most industry observers agree that the change can only help.

 

For the latest on trends in the LIHTC industry, contact Steve Spall (sspall@tcamre.com) or Allen Feliz (afeliz@tcamre.com) — (617) 542-1200.

Asset Management, Federal Housing Programs, LIHTC

The State of Federal Funding for Affordable Housing

allen_felizThe current short-term continuing resolution (CR) funds the federal government at current, fiscal year 2013 post-sequestration levels until January 15, 2014. An appointed conference committee will work on a fiscal year 2014 budget agreement by December 13 that could lead to the passing of spending bills for the remainder of the fiscal year and the replacement of sequestration.

 

If the budget conference committee fails to reach an agreement, the current short-term CR could be extended for the rest of the fiscal year and housing authorities would have to work with FY13 post-sequestration funding for all of FY14. The inability to fund the federal government for a full fiscal year and remove sequestration would not only result in low proration levels for the Public Housing Operating Fund, Section 8 voucher renewals and Section 8 administrative fees, but also, the lack of funding will cause housing authorities to continue lowering the amount of Section 8 vouchers available to its communities. 

For Example:

Cited on the Council of Large Public Housing Authorities (CLPHA) website, the state of funding for federal housing programs is unsustainable: “By the end of 2013, the Boston Housing Authority will have drained its reserve account completely, spending $14 million from reserves to make up for the 5 percent federal sequester cut. This will leave BHA “unable to absorb any more federal cuts without putting people on the streets. ‘Unless there is some relief on the federal level, this housing authority and housing authorities throughout the country could be faced with a very significant crisis,’ BHA administrator Bill McGonagle said. ‘I am not at all optimistic about our ability to replenish that reserve.’” (October 14)” (Source: http://www.clpha.org/)

 

TCAM continues to monitor ongoing events such as how subsidies are handled by housing authorities and other administrators and the potential impact on available funds in the event of prolonged sequestration-level funding. For the latest updates on the federal budget and its impact on housing programs, contact Steve Spall (sspall@tcamre.com) or Allen Feliz (afeliz@tcamre.com) or (617) 542-1200.

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Asset Management, Federal Housing Programs, LIHTC, Multifamily Lending, TCAM Services

TCAM’s WhitePaper – LIHTC Asset Management

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“LIHTC asset management, in a nutshell, is the process of overseeing a property’s financial performance, physical condition and compliance with applicable regulations to help investors, lenders, state agencies and other capital providers receive expected benefits and manage their risk.”   
 

Originally published in the Tax Credit Advisor, Low-Income Housing Tax Credit Asset Management, provides an overview of asset management in the LIHTC industry, describes other key services that asset managers provide, and outlines how asset management is done effectively.

 

To learn more about timeless fundamentals of LIHTC asset management, contact Steve Spall (sspall@tcamre.com) or Allen Feliz (afeliz@tcamre.com) or (617) 542-1200

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Asset Management, TCAM Services

Workouts and Problem Resolution

allen_felizWorkouts are unusual in affordable housing, but when they occur they are also unusually difficult and complex. Affordable housing transactions often have multiple layers of financing and regulatory requirements, public, private and non-profit participants, and complex community considerations, all in addition to the market and financing issues now affecting real estate more generally. In other words,  affordable housing workouts require specialized expertise.

In TCAM’s experience, there are four steps that owners or investors with troubled assets can take to efficiently limit risk and improve the performance of assets in their portfolios:

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  1. Overall portfolio assessment to identify the assets that could most benefit
    from watchlist and/or workout attention. In our experience, there are some problems that are relatively easy to fix, with enormous benefits to the capital provider. Conversely, there are problems that cannot be fixed without enormous cost, or yield very little in the way of benefits to the client. The portfolio review would prioritize the assets on which the capital provider should spend its time, thereby allowing for targeted and efficient use of resources;
  2. Assessments of individual assets: Once the priority assets are identified, the next step is an in-depth assessment of the asset’s operational, financial, and sponsorship issues. The assessment should include full site visit, market survey, assessment of site management performance and property condition, compliance review, identification and description of issues and of the owner or investor’s exposure. The assessment should address the capabilities of the GP/developer(s) and/or property manager and their ability to solve or contribute to the resolution of the problems of the property. The assessment should also include a recommendation as to specific steps for the capital provider to address and remedy the issue and exposure identified;
  3. On-going oversight for those assets that are determined by the assessment to need intensive on-going attention, but not major restructuring or other intervention by the capital provider; and
  4. Implementing the actions identified in the assessment for those assets that are determined to need major restructuring or other intervention. These actions would include on-going oversight and analysis as well as implementing steps involved in the workout, such as repositioning the asset, implementing new leasing strategies, introducing cost controls, replacing site and/or regional managers and projecting the potential impact of capital restructuring proposals.

If you need assistance finding solutions, or developing turnaround strategies, for your troubled assets, contact us at Steve Spall (sspall@tcamre.com) or Allen Feliz (afeliz@tcamre.com) — (617) 542-1200.

Affordable Housing Asset Management, Due Diligence, LIHTC, New Clients, TCAM News, Uncategorized

TCAM Helps Housing Partnership Equity Trust Complete Property Acquisition

BOSTON, MA – TCAM, a leading investment manager and consultant in the affordable housing industry, today announced its role in the recent acquisition by the Housing Partnership Equity Trust (“Equity Trust”) of Woodmere Trace Apartments, a 300-unit property in Norfolk, Virginia. The Equity Trust worked in partnership with the Community Preservation and Development Corporation (“CPDC”) to acquire Woodmere Trace, preserving critical affordable housing without dependence on low-income housing tax credits or other public subsidies.

 

TCAM provided underwriting and due diligence services for the acquisition, as it did for the other two properties acquired by the Equity Trust this year.  Working closely with the Equity Trust and its partners, TCAM developed and maintained the investment model for the acquisition, evaluated the reports of due diligence providers, and prepared analyses for negotiations with the sellers and investment decisions by the Equity Trust.

 

In addition to underwriting and due diligence services, TCAM supports clients engaged in a number of other transactions. During 2013, TCAM has helped clients dispose of properties and limited partnership interests, and has managed workouts on behalf of investor clients.

 

“Affordable housing transactions are complex and time-consuming,” said Chief Executive Officer Jenny Netzer. “TCAM’s participation helps clients manage their time and achieve better results.”

 

For more coverage on the Equity Trust and its recent activities, visit the following sites:

 

 

TCAM’s clients include capital providers for affordable housing with and without low income housing tax credits. Clients are major financial institutions, investors, insurance companies, affordable housing lenders, LIHTC syndicators, guarantors, owners and developers, investment funds, large urban housing authorities, and state housing finance agencies. To date, TCAM has provided asset management and consulting services to clients for more than 800 properties containing 120,200 apartment units in 46 states, Washington, D.C. and Puerto Rico, representing in excess of $5.5 billion of client capital.

 

TCAM is owned by QuietStream Financial (http://quietstreamfinancial.com). QuietStream Financial’s companies provide alternative asset management services and structured finance products for real estate borrowers, financial institutions and investors.

 

Learn more about these companies:

Visit Equity Trust

Visit QuietStream Financial