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ORIX LIHTC Portfolio Reaches $15B With Boston Capital Acquisition

Posted by: | Posted on: September 15, 2020

An ORIX Corp. subsidiary, Boston Financial Investment Management, has entered into an agreement with Boston Capital to acquire its low-income housing tax credit fund portfolio, with the closing subject to customary conditions and approvals.

Boston Financial is among the leaders 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.

Post-acquisition, it adds, it expects that Boston Financial will enjoy a top position in the LIHTC asset management industry and will be well-positioned to expand further via additional opportunistic investments.

Historical LIHTC performance has remained stable during past economic downturns, and ORIX says that it views the LIHTC business as one that shows projected growth, even during the economic uncertainty of the COVID-19 pandemic.

It notes, as illustration, that LIHTC foreclosures remained low during the 2008 Financial Crisis. Because rent for LIHTC properties is often below comparable non-tax credit properties and the government supports many LIHTC residents in the form of rental assistance, Boston Financial says it has seen occupancy rates remain stable during the COVID-19 pandemic.

Indeed, according to a recent report by Novogradac, a national accounting and consulting firm, occupancy rates and rental income at low-income housing tax credit properties recover quickly after economic downturns and in general, LIHTC properties have a history of riding out recessions.

Perhaps for that reason, there has been a flurry of activity and fund-raising 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 housing tax credit fund and in May WNC closed a LIHTC Fund with $90 million in equity investments

Since its founding in 1981, Tokyo-based Orix has been expanding financial services in the US, building a substantial presence within the real estate finance industry. In addition to its LIHTC program, it has invested in RED Capital Group, Lancaster Pollard, NXT Capital, and, most recently, Hunt Real Estate Capital.

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