Affordable housing developers in New York are finding underwriters and tax-credit investors for their deals, but the market is tougher for newer entrants than it was in the boom years, panelists said yesterday.
The mood at the New York State Association for Affordable Housing’s annual conference in New York City was more upbeat than it was a year ago, when the city announced its affordable housing program would boost its preservation deals relative to new construction in light of the credit crunch and recession.
“What a difference a year makes,” said William Traylor, president of the Richman Affordable Housing Group, who moderated a panel on the state of affordable housing. “When we gathered last year in early 2009, not many of us were smiling … Things certainly feel better now, and by and large they are better. Credit markets have certainly improved.”
Panelists said that the market was more segmented than in the past with banks and investors competing to do business with larger, experienced affordable housing developers while it had become more difficult for smaller and newer clients.
“Banks are scrutinizing deals more and honing in more on what are the risks in the deals, what is the downside risk, and how do we mitigate them to the point that we’re comfortable,” said Capital One NA senior vice president Desiree Francis.
“In the case of an existing client, you have some track record to know basically they are going to finish the project on time as well as they have financial strength in the event something were to go wrong in construction,” Francis said.
Marc Jahr, president of the New York City Housing Development Corp., said that nonprofits have recently proposed deals as a joint venture with a larger developer that 10 years ago would not have needed a partner.
“This is a narrower market than it’s been — it’s a tougher market to get into,” Jahr said. “Partnering seems to be the way to go, particularly for the nonprofits out there with thinner balance sheets, without the same ability to provide the types of guarantees that a developer with a deep pocket can provide.”
Multifamily bond issuance by the HDC and the New York State Housing Finance Agency last year was slightly more than half of what it had been in 2008. The HDC sold $698 million of bonds in 2009 compared to $1.17 billion in 2008 and the HFA sold $548.6 million in 2009 compared to $1.18 billion the previous year, according to Thomson Reuters.
