1 / 19

Tax Credit Portfolio Exit Strategies IPED November 20, 2008 Kevin W. Day

Tax Credit Portfolio Exit Strategies IPED November 20, 2008 Kevin W. Day. It’s Year 15! – so what does that mean?. We’re all in this together…. Let Them Eat Cat Food. live area (click “control+g” to view live area guides)

odessa-spears
Download Presentation

Tax Credit Portfolio Exit Strategies IPED November 20, 2008 Kevin W. Day

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Tax Credit Portfolio Exit StrategiesIPEDNovember 20, 2008Kevin W. Day

  2. It’s Year 15! – so what does that mean?

  3. We’re all in this together….

  4. Let Them Eat Cat Food live area(click “control+g” to view live area guides) all text, images, or artwork must appear within these guidesalways view guides when aligning elements

  5. Investor/Syndicator Goals Close Funds soon after year 15 Maximize residual value…can exit after credit stream ends in Year 11 Responsible transition to new ownership

  6. Who’s driving this thing?

  7. Let’s look under the hood…

  8. What’ve we got to sell? • LAND, STICKS & BRICKS • + • OTHER “STUFF”

  9. What can we do with this thing? Operate “as is” Convert to market or other use (pre 90 ..or QC) Convert to affordable condominium Déjà vu all over again (new tax credits)

  10. Let me off this ride….

  11. Qualified Contract • QC Formula = • Outstanding debt + initial capital contribution + return on capital (CPI) - distributions

  12. ….not so fast • 50 flavors • Show me the paper! • Expensive process • Did we start yet? • Fuzzy math • What does qualified mean?

  13. QC Success Stories

  14. Early Exit

  15. Options before Y15 • Sale of Partnership vs. Property • 10 year rule/Acquisition Basis • Investor – Avoiding Recapture Exposure • Cash Now vs. Losses/Future Value

  16. Cutler Vista Miami FL 216 Units PIS 1990 as 9% New construction Original Equity 5.1M Resyndicate with 4% Credits

  17. Resyndicate with 4% Credits Sources Uses New Bonds:  7,120 Retire 1st 3,440 SAIL:  2,500 SAIL 2,500 TC Equity:    4,800 LPs 1,800 Total:           14,420 SAIL Int. 760 Rehab 3,600 Soft/DF/Reserves 2,320 Total 14,420

  18. Resyndication Issues • Public benefit – cost of preservation vs. build new • Sentiment against extended use properties • Untangling restrictions and Rights of First Refusal • Qualified households Vs tenants in possession • Anti-churning rule (affiliated buyer) 10% 50% rule • 10 year hold rule • Aggressive buyers vs. Preservation resources

  19. Helpful hints for Year 15 • Start early…Analyze in Y13, prepare in Y14, execute Y15 • Analyze all possible strategies in light of the local market and capital markets • Many new financing programs available for preservation, but take time to implement • Know your regulatory agreements, partnership and loan agreements.. and approvals needed. • Pick the right local partner to help you execute your strategy • Patience Perseverance and Prozac

More Related