1. Seller considerations
Greystone Affordable Development

2. Topics What’s your situation? What are your restrictions?
What can you support?

3. Tax Credit Transactions
What’s your situation?

4. What’s Your Situation? Syndicator / institutional partner
Individual partners
No partners

5. What are your restrictions?
Tax Credit Transactions
What are your restrictions?

6. What Are Your Restrictions?
Restrictions to seller consideration only apply when a transfer of the property is occurring. At any point, a GP / Managing Member can buy its partners’ ownership interest for any agreed-upon price with no restrictions, as long as the same entity owns the property after the transaction closes.
Linked to financing / applicable appraised value
Multiple restrictions (each party may have their own requirements) RD
State HFA / LIHTC

7. What Are Your Restrictions?
Appraised Value – the Income Approach
Net Operating Income
Cap Rate
NOI is before debt service payments
Cap Rate: an investor’s rate of return on an income-producing property
Higher NOI = Higher Value
Lower cap rate = Higher Value

8. What Are Your Restrictions?
RD Restrictions:
Relevant value tied to restrictive use provisions
RUPs in place: as-is restricted value (actual NOI)
RUPs expired: as-is market / unrestricted value (market NOI)
*Cap rates can vary depending on subsidy
Replacement reserve balance
Interest Credit Subsidy
The “Exit Incentive”
Allowable when a property is underwater
Must pass all “Dashboard Tests”

9. What Are Your Restrictions?
Dashboard Tests:
Post Transfer Rents
Rents Cash Flow Proposed Operations
Vacancy Loss
Operating Expenses
GOA Minimum Requirement
Tenant Protection
CNA Funding & Reserve Deposit
New Loans for RD 515 Purposes
DSCR
Loan to Value
Loan Terms of 3rd Party Debt
Balanced Sources and Uses

10. What Are Your Restrictions?
State HFA / LIHTC Restrictions
Purchase Price cannot exceed as-is value
Method for determining value may differ
Underwater / “Exit Incentive” Properties may have issues

11. Tax Credit Transactions
What can you support?

12. What Can You Support? Linked to financing: 9% Tax Credits
Tax-Exempt Bonds / 4% Tax Credits
515 Funds
Seller Notes

13. What Can You Support?
9% Tax Credits
More Equity*
Timing
Balancing Act

14. What Can You Support? Tax-Exempt Bonds / 4% Tax Credits Less Equity
Timing
Bond-Eligible Costs and the 95-5 Test
Portfolio approach

15. What Can You Support?
Tax-Exempt Bonds / 4% Tax Credits – Portfolio Approach
Current Scenario (property-by-property needs):

16. What Can You Support?
Tax-Exempt Bonds / 4% Tax Credits – Portfolio Approach
Revised / re-shuffled Scenario (portfolio needs):

17. What Can You Support? New 515 Funds Sales proceeds ineligible
What other sources are available?
Is a transfer occurring?

18. What Can You Support? Seller Notes
Used to compensate sellers over time when up-front cash payments are not feasible
No Reversionary Interest
No mortgage
Payment capped at RTO
Potential issues if related sellers

19. Contact Information
Greystone Affordable Development 4025 Lake Boone Trail, Suite 209 Raleigh, NC (919)