CohnReznick Releases 2019 LIHTC Investment Report
Tax credit sites have recently enjoyed strong occupancy rates and healthy financial conditions, according to CohnReznick’s Tax Credit Investment Services’ annual report on the performance of sites financed with the federal LIHTC. The data in this report provide detailed insights into the performance of LIHTC properties and the latest performance trends observed across the surveyed portfolio, consisting of more than 20,000 properties.
In 2018, the surveyed portfolio reported, on a median basis, a 1.40x debt-coverage ratio (DCR), and more than $700 per unit per annum net cash flow (cash flow available after paying for operating expenses, mandatory debt service, and required replacement reserve contributions), according to CohnReznick’s “Housing Tax Credit Investment: Investment and Operational Performance” report. The median DCR is a new high-water mark for this metric, which was about 1.15x between 2000 and 2008 and then increased to 1.24x in 2010.
At $16.4 billion, 2018 also witnessed a new high-water mark for investor equity. The presence of banking institutions motivated by the Community Reinvestment Act continued to dominate the investor base, while the return of Fannie Mae and Freddie Mac as investors served to provide further diversification to the marketplace, along with other economic-motivated nonbank investors, says the report. In years 2015-18, on average $15.2 billion in equity was invested in housing credit-financed developments annually. After reaching a historical high in 2016, housing tax credit equity volume decreased by 7.5 percent in 2017 amid the nearly yearlong prospect of reduced corporate tax rates before bouncing back.