Affordable Housing
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Affordable Housing and Real Estate Case Study

Case Study

Maximizing Basis

The Situation
A developer has projected their low income credit stream, however, they are missing projections due to unanticipated land development costs and construction savings in certain areas. The developer has looked to KPM for advice.

KPM Business Idea at Work
KPM worked with the developer to analyze all non-eligible and eligible costs to ensure maximization of basis. After reviewing the existing development agreements, KPM recommended an increase in the development fee. KPM also reviewed allocations between the land and building shell, suggesting a more advantageous allocation methodology. Finally, KPM recommended a change in the fee structure for the community center located on the property, which would increase the eligibility of certain costs.

 

 

 

Matching Deals

The Situation
A West Coast syndicator is interested in breaking into the Northeast marketplace, and is looking for sound credit deals in specific geographic regions. The syndicator has reached out to KPM for help.

KPM Business Idea at Work
KPM leveraged its experience and vast network to introduce the syndicator to a significant developer with 10 different projects in the pipeline. As a result, the developer was able to close a deal with that syndicator which led to the development of a 200-unit mixed-use property.

 

 

Debt and Equity Structuring

The Situation
A community development corporation (CDC) is developing a projection for financing on a new affordable housing property. The traditional sources available will not be sufficient to meet construction and operating reserve requirements, leaving the CDC searching for creative solutions to its financing gap.

KPM Business Idea at Work
KPM worked with the CDC to indentify and take advantage of a variety of soft debt and multi-layer financing sources which will allow the project to move forward. Further, KPM helped the CDC rework projections in order to present plans to various local governments and investors.

 

 

Year 15

The Situation
A property owner has reached year 15 and has received an offer from the limited partner to sell their interest to the general partner. The client turned to KPM for help in determining the tax effects of the transaction in order to best structure an acceptable sale of the partnership interest.

KPM Business Idea at Work
KPM worked with the client to determine the tax effects of the proposed transaction, and developed a counter proposal for the sale of the interest from the limited partner. Further, KPM worked with the client to develop a new structure that would ensure opportunities to re-syndicate the property without harming future tax benefits.

 

 

Rent Up

The Situation
A management company was seeking advice regarding the rent up strategy for a multiple BIN project with various certificate of occupancy dates during the year. The management company turned to KPM.

KPM Business Idea at Work
KPM worked with the management company to gain an understanding of the process which would maximize the first year credits on a BIN by BIN basis. KPM worked with the client to develop a sound strategy that took into account the marketing plan, existing tenants in the building, and certificate of occupancy dates. The proposed plan allowed the management company to exceed projected tax benefits in the first year.

 

 

 

 

Condo Conversions

The Situation
A non-profit organization has purchased a vacant condo complex with the intention of converting it to affordable rental units. The organization looked to KPM to help them navigate the multiple tax and accounting issues inherent in this transaction.

KPM Business Idea at Work
KPM’s experienced staff analyzed the current debt structure and legal restrictions on the property and made recommendations for changes to their operating and regulatory agreements. KPM helped the client understand the implications of UBIT and the accounting transactions necessary for a successful property conversion.

 

 

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Business Ideas at Work