The Closing: A Monthly Summary with Ideas to Get Your Deals Closed

Greetings housing enthusiasts, and welcome with another edition of the Closing! I am writing this month’s edition from the plane departing the National Housing and Rehabilitation Association Annual Meeting and Symposium in Palm Beach. What a wonderful meeting of minds in the sunshine! While I attended many interesting panels, the key takeaways from the tax credit equity roundtable were very illuminating. For this month’s main event, please see highlights from that panel below:

Recent changes to Community Reinvestment Act requirements may encourage investors into more secondary and tertiary markets.
If the reduction in the 50% test is enacted, the market could experience a period of more 4% deals than there is available equity. It may take some time to bring more investors into the market and correct this potential imbalance.
If your deal works now, sign it up. Uncertainty in the market is putting downward pressure on pricing. Waiting for improved pricing may not yield desired results.
The market is seeing a flight to quality with greater focus on developer/ guarantor financial strength.
Err on the conservative side for equity pricing in your pro formas, both to account for the above uncertainty, but also due to variability often seen in election years.

Although these highlights are not all rosey, there was a very interesting tax exempt bond panel featuring speakers from some of our financial partners. Creative bond structuring on your 4% deals can help fill gaps in myriad ways, from decreasing construction period interest, to generating additional tax credit equity. If you have a stubborn gap on your 4% deal, ping me for a brainstorming session to see if we can structure some out of the box gap fillers

Noteworthy Research

What Has Zoning Reform Accomplished in Cambridge, Massachusetts?

Key Takeaway: The latest America’s Rental Housing report highlighted the first-of-its-kind 100 Percent Affordable Housing Overlay (AHO) in Cambridge, Massachusetts as an example of how communities are changing zoning to address the affordable housing crisis.
READ MORE

Strong Demand Boosts Prime Office Rents in Many Global Markets

Key Takeaway: Prime office rents in many global markets increased in Q4 despite economic headwinds and the prevalence of hybrid work arrangements. Continued demand for space in prime buildings strengthened top-tier office market fundamentals.
READ MORE

Rents Are Cooling, but Not Everywhere

Key Takeaway: In the recently released report, America’s Rental Housing 2024, it was noted that rental markets are finally cooling after substantial overheating. This slowdown in rent growth has only continued.
READ MORE

Upcoming Events

Housing California
Long Beach, CA | Mar 6 - 8, 2024
I'll be there! Ping me for a meeting.
Nixon Peabody Affordable Roundtable
Newport Beach, CA | April 25, 2024
I'll be there! Ping me for a meeting.

Notice Board

Rates

Treasuries are up moderately over the past month, which has been counter balanced by some spread compression for Agency lenders. Ping me for a project specific quote.

Questions?

Click here to schedule a debt discussion or deal brainstorming session.

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Other Interesting Items (OII)

Black History Month

To recognize Black History month, our Other Interesting Items feature revisits a powerful article in the New York times from 2023. To recap the opening and some key points, out of roughly 112,000 real estate development companies in the United States, about 111,000 of them are white owned, 447 are black owned and 175 are Hispanic Owned companies.

Although this article is not affordable housing specific, it does highlight a diversity gap that is echoed in the affordable housing community, specifically among for-profit developers. While many institutions are working to provide support and programs to address some of the underlying causes of this disparity (such as NEF’s Emerging Minority Developer Fund or LIIF’s Black Developer Capital Initiative), there is still so much to be done.

If you know of other initiatives or best practices to improve diversity in our industry, please ping me!