Berkadia expanded its LIHTC platform with the acquisition of Idaho-based brokerage company LIHTC Advisors. LIHTC Advisors is a full service home investor company specializing in the low income real estate market. Client of the brokerage company Jeff Irish and Brandon Grisham have joined Berkadia to lead the LIHTC platform. The duo has closed more than $ 2 billion in affordable housing across the country.
The acquisition of LIHTC Advisors is part of Berkadia’s plan to expand its affordable housing practice, which the company calls "Critical Area". Before the recession, the affordable housing and LIHTC markets were among the most attractive investment markets. After the pandemic, the demand for affordable housing was only exacerbated by job losses and economic hardship. A current report from Novogradac reviewed LIHTC's historical performance from 2009 to 2019. The report found that LIHTC two-bedroom properties serving residents at or below 60% of median land income were 95% occupied. In addition, LIHTC properties were not significantly affected by the 2008 financial crisis. At the beginning of 2008, LIHTC rents even rose by 1.5%. This research has confirmed other data on affordable residential properties that typically remain stable during times of economic hardship, especially when compared to off-market units.
Berkadia is committed to expanding its affordable housing program. In 2019 David Leopold joined the firm as SVP and head of Berkadia Affordable, which includes overseeing Berkadia Affordable's mortgage banking, investment sales and recently integrated tax credit syndication teams. Irish and Grisham will now join this team and bring 19 years of combined experience to the company. Despite the pandemic, they already expect a transaction volume by 2019.
This is good news for the market. At the beginning of the recession some experts The forecast LIHTC investments would stall amid widespread uncertainty and a recession on Main Street affecting lower-income workers. Some investors paused to wait for the initial disruption while others stepped back to wait for a price correction. In May and June, the fear of investing in affordable housing had subsided and investors re-entered the market.
Berkadia isn't the only one who sees opportunities in affordable housing. Alliant Capital recently closed fund 103, a low-income tax credit fund of $ 65 million. The fund will support the development of 650 LIHTC units in markets hardest hit by the coronavirus pandemic, including Arizona, Texas, North Carolina and Florida. Like Berkadias Iren and Grisham, who anticipate an increase in investment volume, Alliant Capital also saw continued demand from investors in the fund.