Transcript How to Develop a Downtown Plan

Capital Markets Roundtable
Historic Tax Credit Developer’s Conference
Friday, February 6, 2009
Miami Beach, Florida
General Economic Conditions
• GDP contracts at an approximate 6%
annual rate in the fourth quarter of 2008
• 2008 sees the highest job loss since World
War II
• Both the U.S economy and the job market
fell off a cliff in 2008
General Economic Conditions
•
The Fed has now cut interest rates to
virtually zero
•
The CBO estimates that the US economy
will be in recession through 2009
•
The stimulus package – too little, too late?
Markets
•
Burst Bubbles -- Home prices – Case Schiller index
shows 18%+ declines in November for 20 major metro
markets.
•
What does this mean for the apartment sector?
Commercial real estate in general?
•
Is the bottom in sight?
•
Workout activity – even some experienced HTC
developers have been affected
The Financial Sector
• Many of the largest and most established financial
institutions have suffered huge losses or no longer
exist independently. Some of these companies are
(or were) investors in and lenders to HTC deals.
• The market for LIHTC has been severely disrupted.
How will demand for HTC be affected?
• How have pricing, terms and underwriting been
affected?
The Credit Crunch
• Some lenders are conserving capital, perhaps in
case the worst is yet to come.
• Some deals have stalled due to lack of financing
• Tighter underwriting
• What property types are lenders/investors staying
away from? What geographic areas?
• FHA Insured Loans – use with lease structure
possible but not assured
Things are very rough out there –
but deals are still getting done.