CBRE Launches Tax Credit Finance Unit

LOS ANGELES-CB Richard Ellis has launched a new initiative called the Low-Income Housing Tax Credit Group to assist owners in the refinancing and disposition of properties. Tom Fischer, an SVP with the new Columbus, OH-based CBRE unit, tells GlobeSt.com that demand for advisory services is "just starting to gain velocity" among owners of properties financed with federal low-income tax credits.

Fischer explains that the federal low-income housing tax credit program, created in 1986, enables developers to obtain equity from the sale of tax credits for their projects. There is a 15-year compliance period, followed by an extended-use period, and projects typically serve households earning 50% to 60% of the area median income.

Since the first units financed under the program went in service around 1990, Fischer explains, "The owners, who include the general and limited partners, are at the end of the tax credit benefit period, so they are looking for ways to reposition their assets." The deals are known in the industry as "year 15 dispositions."

Repositioning could mean refinancing the property, getting new credits to improve the asset, disposing of it or other options. "Its a very individualized decision," Fischer says.

In addition to Fischer, who has 25 years of real estate and finance experience, the members of the new CBRE group in Columbus include VPs Tom Mangum and Sam Merkle. Mangum is a 10-year veteran of commercial and multifamily real estate, and Merkle has 20 years of commercial and multifamily real estate experience.

The new group is a specialty practice within the Multi-Housing Group of CBRE's Capital Markets line of business. It is one ofonly a few such practice groups in commercial real estate services, notes Greg Vorwaller, president of CBRE Investment Properties.

Fischer, Mangum and Merkle have executed 60 dispositions and 20 new developments in the low-income housing segment over the past five years, plus advisory services to numerous projects across the country, notes Rob Click, senior managing director of CBRE's Columbus office. The three have also led an initiative to dispose of approximately 60 properties over the last 16 months.