1. AHIC The Low Income Housing Tax Credit Program – A Performance Update Cindy Fang Senior Manager Tax Credit Investment Services
October 7, 2014

2. Background
Over 18,000 properties surveyed; representing approximately 70% of “actively managed” LIHTC properties and 90% of those placed in service in the last five years
Data contributed by 35 participants, including 32 syndicators and 3 direct investors
Focused on the operating performance of nearly 16,000 stabilized properties
October 7, 2014

3. Portfolio Composition
On a median basis, placed in service in 2005
27% of equity invested in properties placed in service in 2009 or later
74% of equity invested in properties placed in service in 2004 or later
On average, comprised of 76.5 apartment units/property
9% credit properties averaged 58.8 units/property
4% credit properties averaged units/property
October 7, 2014

4. Portfolio Performance
High occupancy continued
Occupancy levels in LIHTC properties have been remarkable consistent from one year to the next
State level median occupancy ranged from 94% to nearly 100%
Occupancy issues were often NOT due to a lack of demand
October 7, 2014

5. Portfolio Performance
Improved financial performance sustained
DCR hovered between 1.13 and 1.15 for a significant portion of the last decade, before rising to 1.21 in 2009
2010 marked the first year when none of the states operated below 1.00 DCR
Strong financial performance was observed across every segment and nearly every participant’s portfolio
October 7, 2014

6. Portfolio Performance
Incidence of underperformance declined
The number of chronically underperforming properties decreased by a significant level
Only 4% properties were less than 90% occupied in 2011/2012
Only 12% properties operated below breakeven in 2011/2012
The distribution of underperforming properties suggested an even lower incidence of “severe” underperformance
Only 4% properties had occupancy less than 85% in 2012
Just over 10% properties incurred deficits of $400 per unit or greater in 2012
A cumulative foreclosure rate of 0.63% reported
October 7, 2014

7. Segmented Portfolio Performance
Do properties exhibiting certain characteristics tend to outperform others?
Strong occupancy observed over the years and across segments
Financial performance most influenced by geographic location
Besides location factors:
Newly constructed or rehabbed properties tend to have above average occupancy levels;
Pre-2000 properties reported DCRs as strong as that reported by newer projects;
4% properties performed on par with 9% properties;
Larger properties ( units/property) had the lowest incidence of underperformance; smaller properties (<50 units/property) had a disproportionately larger share of underperformance but improved significantly as a whole;
Historic properties still struggled with the least favorable metrics.
October 7, 2014

8. Segmented Portfolio Performance
October 7, 2014

9. A Look Back and Forward on Property Performance
What made the improved performance possible?
Out of many possible explanations, key contributing factors included:
More favorable debt to equity mix
Refinancing at lower interest rates
Reduced economic vacancy losses
More sophisticated expense underwriting
Whether improved operating performance can sustain in the future?
October 7, 2014

10. Fund Yield Performance
893 post-1999 funds analyzed
Fund yield variance by age of the funds
On a weighted average basis, a positive 6.45% yield variance was reported
16.1% of the funds reported negative yield variances
October 7, 2014

11. Fund Credit Delivery Performance
October 7, 2014

12. Conclusion
The national inventory of housing credit properties continued to perform well
While the housing credit has become the most successful housing program in United States history it does not produce enough rental units to make a serious dent in the national shortfall of affordable housing
As good as the performance metrics are, it is still the case that one in five properties operates below breakeven, complicated by various industry wide challenges
Collaboration is the key to the continued success of the program
October 7, 2014