Industry Influencers: LIHTC Equity Still Flowing into Multifamily

May 13, 2020

Industry Influencers: LIHTC Equity Still Flowing into Multifamily

May 13, 2020

Berkadia has continued to provide reliable, thoughtful input to our clients and the commercial real estate community at large during the COVID-19 crisis. We understand that the best way through this crisis is by keeping our eyes on the long view and working together whenever possible.

Industry Influencers highlights the many ways that Berkadians are leveraging their expertise to support communities that have been impacted by the pandemic. This month’s examples range from sharing best-case practices for hospitality operators to guiding multifamily investor clients looking to take advantage of the still-hot LIHTC equity market.

Financing Solutions for Hard-Hit Gulf Coast Hospitality Sector

Tampa Hospitality Industry Seeks Financing Help
Hotels will leverage financial incentives for customers and strategic debt management to outlast COVID-19.

A recent article in Business Observer emphasized just how hard COVID-19 has hit the hospitality industry in the Tampa metro and Gulf Coast. Speaking to potential short- and long-term concerns for the job sector, members of Berkadia’s Hotels and Hospitality Team identified creative strategies that local hotels are taking to mitigate the impact of the pandemic.

“Some owners are asking lenders to convert their loans to interest-only for a time, while others are asking to be able to tap into (furniture, fixture and equipment) reserves,” said Preston Reid, managing director and another member of the Hotels and Hospitality Team. “Generally, what we’re finding is that lenders that can be co-operative are.”

Senior Director Wyatt Krapf noted that some hotels are also strategizing how to jumpstart traffic once travel restrictions are relaxed.  One common strategy mentioned was offering new incentives, such as $150 coupons, in exchange for customers booking future stays.

Support for LIHTC Equity Investors During Uncertain Times

A blog post from professional services firm Novogradac pointed out that Low-Income Housing Tax Credit (LIHTC) investors are now exercising greater caution. The economic disruption caused by COVID-19 has overwhelmingly impacted gig and hourly workers, potentially creating challenges for those renters to pay their landlords.

However, apartment operators across all asset types have yet to see a significant decline in rent collection. As a result, many multifamily investors, including Berkadia and our clients, are cautiously moving forward with their scheduled LIHTC equity transactions. During the first half of April alone, Berkadia was successful in closing $45.3 million of LIHTC equity.

“Berkadia and its investors are moving prudently with respect to new deals, balancing the needs of our developer clients, potential residents and the current uncertainty in the market,” said Josh Levy, managing director and head of production of the Affordable Tax Credit group at Berkadia. “Investors want more clarity and a regular working economic environment in order to better understand how to successfully navigate the market.”