Year 15 Panel: Market Overview and Case Studies
All TCG Transactions:
Representation of Sales Market
Region
Prop.
Price
Avg. Price
Units
Avg. Units
Avg.
$/Unit
Avg. Year
Built
Avg.
$/RSF
Avg. TCCP Avg. Cap
Year
Rate
$34,737
$51,250
$55,416
$42,676
$37,477
$66,709
$46,658
1990
1988
1967
1988
1983
1980
1985
$37.66
$63.45
$71.50
$41.15
$40.27
$83.30
$53.14
15
14
15
13
13
14
14
7.56%
6.83%
7.63%
7.57%
6.91%
6.72%
7.24%
1996
1996
1972
1993
1989
1987
1989
$45.77
$66.68
$63.17
$45.89
$55.46
$103.68
$77.69
15
14
15
15
15
16
15
7.91%
6.15%
7.95%
6.83%
7.16%
5.35%
6.56%
CLOSED LIHTC TRANSACTIONS
Midwest
Mountain West
Northeast
Southeast
Southwest
West Coast
Total
106
41
28
163
42
93
473
$397,020,400
$253,580,427
$164,054,805
$1,191,830,855
$328,549,380
$965,047,650
$3,300,083,517
$3,745,475
$6,184,888
$5,859,100
$7,311,846
$7,822,604
$10,376,856
$6,976,921
11,732
5,029
3,026
27,366
8,923
13,632
69,708
111
123
108
168
212
147
147
LISTED & MARKETING LIHTC TRANSACTIONS
Midwest
Mountain West
Northeast
Southeast
Southwest
West Coast
Total
36
21
8
32
16
31
144
$119,038,000
$113,061,999
$80,750,000
$191,637,000
$127,600,000
$487,665,394
$1,119,752,393
$3,401,086
$5,383,905
$10,093,750
$6,387,900
$7,975,000
$16,255,513
$7,998,231
3,461
2,268
1,116
4,586
2,440
4,590
18,461
96
108
140
143
153
148
128
$35,550
$53,081
$118,113
$54,565
$39,252
$86,686
$62,028
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TCG Net Sales Proceeds Since 2010
Closed
Listed
Closed/Listed
Avg. Net Proceeds
Avg. Net Proceeds
Avg. Net Proceeds/Unit
Midwest
$2,315,254
$538,223
$8,132
Mountain West
$2,483,795
$664,800
$13,644
Northeast
$1,522,973
$8,585,984
$23,556
Southeast
$2,167,268
$2,910,832
$14,480
Southwest
$3,057,171
$4,057,888
$13,756
West Coast
$8,634,400
$6,661,967
$32,669
Total
$3,216,508
$4,033,662
$17,241
Region
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Buyer Types & Execution Since 2011
Buyer Type
Real Estate Fund Operator
Tax Credit Developer
Investment Company
Investment Partnership
Private Individual
Transactions
49
25
49
13
33
Buyer Execution
Resyndication
Yield (Cash Flow)
Cash Flow to Resyndication
Transactions
18
106
4
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Case Study: Plainfield, Indiana
| Year 15
Transaction Highlights
Close Date:
January, 2012
Units:
220
Price:
$11,825,000
Deal Type:
Fee Simple
Final Year of TCCP:
2012
TCCP Year Closed:
15
Net Proceeds:
$6,891,513
Year 0 CAP Rate:
7.97%
Year 1 CAP Rate:
8.01%
Year 0 Cash-On-Cash:
15.36%
Year 1 Cash-On-Cash:
15.54%
Qualified Contact Eligible?
Yes
Equity Required:
$2,704,600
Primary Debt Source:
Fannie Mae
Primary Debt Details: New Loan | 3.77% | LTV 80%
Primary Equity Type:
Fund
Buyer Type: Discretionary Institutional Fund
Seller Type:
Syndicator
Buyer Motive:
Additional Details:
•1995 Construction w/ Extended Use Until 2026
•Growing Submarket, Expanding Employment Base
•LIHTC Asking Rents Below A/B Class Market Rate Assets by $100-$150
•Rental Upside on 60% AMI Units After a Moderate Interior Upgrade
•New Financing at 3.77% on a 7-Year FNMA Loan at the Time of Closing
Cash flow buyer looking for A-/C+ multifamily assets to buy for a 7+ year hold with a projected asset-level IRR of 15-18.%.
Seller Motive:
Replacement GP. Limited Partner looking to exit as the asset is post its Tax Credit Compliance Period and economic benefits for the Limited
Partner are waning. Favorable interest environment and no prohibitively high pre-payment penalty make it a likely candidate for a disposition.
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Case Study: Port St. Lucie, FL
| Year 11
Transaction Highlights
Close Date:
Units:
Price:
Deal Type:
Final Year of TCCP:
TCCP Year Closed:
Net Proceeds:
Year 0 CAP Rate:
Year 1 CAP Rate:
Year 0 Cash-On-Cash:
Year 1 Cash-On-Cash:
Qualified Contact Eligible:
Equity Required:
Primary Debt Details:
Primary Equity Type:
Buyer Type:
Seller Type:
July, 2012
284
$11,600,000
Fee Simple
2016
11
<$1,343,934>
5.81%
6.34%
4.30%
5.95%
Yes
$3,677,465
No Debt
Buyer Equity
Private Equity
Original Partnership
Additional Details:
•New 2001 Construction w/ Extended Use Until 2031
•Growing Submarket
•Nonrefundable Deposit at Execution of Contract
•Closed in 17 Days
Buyer Motive:
Operational upside as the market continues to recover. Qualified contract options allows for a re-positioning play post Year 15, i.e. potential
conversion to market rate. Lack of supply on market rate side and an attractive per-unit pricing. Cash flow opportunity to achieve 15+ IRR on a 5+ year hold
strategy.
Seller Motive:
Favorable multifamily environment in a fast-recovering Florida market. Seller faced with the decision to do a cash refinance to replace an inplace high interest debt vs. a disposition on a property that is post its tax credit flow period. Sell prior to a buildup in deferred maintenance items and in a current
low interest rate environment.
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Robert Sheppard
Executive Director
[email protected]
Tax Credit Group of Marcus & Millichap
www.tcg-mm.com
206.826.5700