preservation and property disposition strategies presenter: sean barnes sr. disposition manager
TRANSCRIPT
Preservation and Property Disposition Strategies
Presenter: Sean Barnes
Sr. Disposition Manager
Y15 Program Goals and Objectives
Deliver Expected Investor Benefits Exit investor in Year 16 Transfer to Sponsors Preserve affordability and project viability
Portfolio Dispositions
Over 570 Dispositions completed over 12 years- over 80% to nonprofits
93 Dispositions approved in 2014 Pipeline 85 - 100+/yr.
Typical Exit Structure — assignment of LP interest
Advantages: No change in title providing reduced transaction costs i.e.;
transfer taxes (in some states) and recordation fees Simpler legal agreements — the transfer is effectuated via a
basic Assignment Agreement
Typical Partnership Purchase Provision for Non Profits:
Right of First Refusal to Purchase Property:
Price = debt + exit tax.
Issues: price may exceed FMV, reserves may not be included
Early Exit Terms
Limited Partner Consent
Investor Benefits Delivered – including all tax credits
LIHTC Compliance – property in compliance and expected to
remain in compliance
Limited Partner Indemnified Against Recapture
Continued Asset Management
Real Estate Appraisal – support purchase price
Early Exit Terms
Continued Asset Management Exiting Limited Partner Reserves the Right to:
• Access tenant files
• Access Fair Housing documents
• Access the Property
• Collect the annual Owner’s Cert. of Compliance through Year15.
Enterprise Y15 Survey
Vast Majority Projects Remain Affordable w/current owner Overall properties are in good physical condition at Y15 Most properties do not have value in excess of debt due to
deferred and accrued interest Most likely need some recapitalization to address capital
improvements going forward to remain sustainable. Resyndication potential is limited due to competition with
new affordable units. Market solutions for recapitalization such as resyndication and
refinance may be limited due to State QAP requirements and/or insufficient equity in the real-estate.
Project reserves needed as a resource for capital improvement
Successful strategies
Continue as-is Aggregating smaller properties for recapitalization and/or
resyndication Refinancing with friendly bank with a low interest loan; bank
waived prepayment penalties Resyndication and or Refinance Public debt restructure/forgiveness Access to weatherization and other grants A NYC program that provides up to $15k/unit for
preservation projects.
Greg GriffinSr. Director, Disposition [email protected]
Sean BarnesSr. Disposition Manager, Disposition Management [email protected]
Laura TurnerSr. Disposition Manager, Disposition Management [email protected]