A subsidiary of ORIX Corp., Boston Financial Investment Management, has entered into an agreement with Boston Capital to acquire its portfolio of low-income residential tax credits. The deal is subject to customary conditions and approvals.
Boston Financial is a leader in the LIHTC industry, managing a $ 7.7 billion portfolio comprising over 1,125 properties and 98,110 units. The purchase of Boston Capital's portfolio will nearly double the portfolio to $ 15 billion, the company reports.
Following the acquisition, Boston Financial is expected to occupy a leading position in the LIHTC wealth management industry and be well positioned to continue to expand through additional opportunistic investments.
Historical LIHTC performance has remained stable during the past economic downturn, and ORIX states that the LIHTC business has forecast growth even during the economic uncertainty of the COVID-19 pandemic.
As an illustration, it should be noted that LIHTC foreclosures remained low during the 2008 financial crisis. Because rent for LIHTC real estate is often below comparable property with no tax credit and the government supports many LIHTC residents in the form of rent support, Boston Financial says it has seen stable occupancy during the COVID-19 pandemic.
According to a recent report from Novogradac, a national accounting and advisory firm, occupancy rates and rental income are on low-income residential property tax credits recover quickly after economic downturns In general, LIHTC properties have emerged from recessions in the past.
Perhaps because of this, there has been a spate of activity and fundraiser in this category amid the pandemic. Earlier this month, Berkadia expanded its LIHTC platform with the acquisition of Idaho-based brokerage firm LIHTC Advisors. Last month, Alliant Capital closed a $ 65 million low-income residential real estate tax credit and in May, WNC included a LIHTC fund Equity investments of $ 90 million.
Since its inception in 1981, Tokyo-based Orix has expanded its financial services in the United States and built a significant presence in the real estate finance industry. In addition to its LIHTC program, the company has invested in RED Capital Group, Lancaster Pollard, NXT Capital and most recently Hunt Real Estate Capital.