Can you sell GP interest in a LIHTC deal before the end of its compliance period?
If allowed, what are the considerations as it relates to your other partners (LP syndicators) and what states allow this?
Well, based on the most helpful WSO content, it seems that the General Partner (GP) usually stays in the deal until the end of the compliance year 15. At this point, the Limited Liability Partner (ILP) often looks to exit the deal through various means such as a third-party sale, interest transfer, GP sale, etc.
However, the specifics of selling GP interest in a Low-Income Housing Tax Credit (LIHTC) deal before the end of the 15-year compliance period might depend on the terms of the partnership agreement and the regulations of the state where the property is located.
Unfortunately, I don't have the specifics on which states allow this or the considerations related to other partners like LP syndicators. It might be a good idea to consult with a legal expert or a professional who specializes in LIHTC deals to get a more accurate answer.
Sources: Economics of building affordable housing?, LIHTC during the next recession, Q&A: Affordable Housing Acquisitions
It’s subject to approvals from lenders/ tax credit LP’s, but a GP entity sale should be allowable in all states. If purchasing the GP, assuming no alterations to the current waterfall, you would just underwrite future cash flow, payment of deferred dev fees and the release of any tax credit equity, assuming milestones haven’t been hit yet. Also important to consider future release of operating reserves.
Thanks. Does the affordability period get extended? As the seller of the GP interests, how would one quickly solve for an exit price given the future tax credit stream, deferred fees, and affordability requirements? How would an LP adjust their pay-in schedule and credit pricing given the perceived compliance risk of the unknown future gp operator? How big is this buyer pool for this type of deal? Are there any other major considerations I should be aware of?
Sit rerum quos similique voluptatem quos quos. Rem voluptatum non minus odit. Recusandae a explicabo fugiat nam eius. Nulla quia ullam et omnis non impedit.
Laudantium consequatur necessitatibus in quod eum. Et nemo unde aliquid et ut non sed sunt. Cupiditate error consequuntur vel recusandae deserunt fugit esse. Asperiores vel suscipit ut.
Culpa corrupti et et officia nesciunt iure. Neque nostrum animi earum necessitatibus ullam consequatur magnam. Recusandae in maiores odio est. Hic ex necessitatibus eos repudiandae. Sit et magni error incidunt sit incidunt tempora.
Maiores et sit ipsa sunt. Voluptas exercitationem velit veritatis necessitatibus ut rerum. Sed voluptates corrupti quia quidem voluptas.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...