Report Card: LIHTC Sites Performing Well

Housing credit sites are performing well across-the-board, including large, small, urban, and ex-urban projects, according to a recent report published by CohnReznick entitled “The Low-Income Housing Tax Credit Program: A Performance Update Analysis.”

The report measured the economic performance of housing tax credit projects. Economic performance refers to how well housing credit properties are faring based on the traditional real estate metrics such as occupancy, debt coverage ratio (DCR) and per-unit cash flow. In addition, the report looked at whether investors are achieving the investment yields they’ve been promised and looked at sites that are under-performing.

Data sample. Data for 18,000 sites was contributed by 32 syndicators and three direct investors. Collectively, they represented $76 billion of equity investment and $80 billion total housing credits; 70 percent of all “actively managed” LIHTC sites in the market (1.4 million total units); and 85 percent are stabilized properties.

Sites analyzed. The 2011-2012 operating data for a subset of more than 15,588 stabilized sites were analyzed. The analysis covered all 50 U.S. states, the District of Columbia, Guam, the U.S. Virgin Islands, and Puerto Rico.

Key findings. Occupancy rates have increased across the country since 2009. Improved financial performance continues with regard to debt coverage ratio. All states and territories are operating at or above breakeven. And per-unit net cash flow has continued to improve, doubling over the past six years.

Additional findings. Four percent tax credit sites are performing as well as 9 percent tax credit sites. Sites set aside for senior tenants outperformed the overall portfolio by all measures in 2011 to 2012 (occupancy, DCR, and per-unit cash flow). Only 18.6 percent of sites operated below 1.00 DCR in 2012; as recently as 2002 this figure was 35 percent. Larger sites (101-200 units/site) had the lowest incidence of underperformance. And financial performance was more heavily influenced by geographic location than any other factor.