Multi-Investor Funds Popular Again as LIHTC Equity Volume Increases

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Tax Credit Advisor, October 2010: The low-income housing tax credit equity market continues to see increased activity by corporate investors, including a renewed popularity of multi-investor funds. This heftier flow of equity dollars – from more players – has increased competition for deals, boosted credit pricing to developers, and decreased yields to investors.

“We’re on pace to raise about $250 million [in LIHTC equity] for the year,” compared to $125 million in 2009, says syndicator Jeff Whiting, of City Real Estate Advisors, Inc., Indianapolis, Ind. The firm, in business 10 years, syndicates housing credit deals nationally, with a heavy Midwest focus.

Interviews with syndicators, a major investor, and others revealed strong demand today by corporate investors for housing credits, making it virtually certain of a higher volume of LIHTC equity raised in 2010 than in 2009. The increase is the result of new, often larger investment commitments by existing investors, as well as new tickets from both investors returning or brand new to LIHTC investing, such as insurance companies (see article on p. 34).

Still, there are uncertainties that could impact the future of the LIHTC market. Among these are whether Congress will pass legislation to extend the Section 1602 credit exchange program, and about the future course of the national and many local economies.

Upswing in Multi-Investor Funds

     

One aspect of the recharged industry is the greater number and larger size of national multi-investor funds, which waned considerably during the worst of the LIHTC market downturn. Read More…