AHIC Fall Summit Open Forum: Key Takeaways

Moving Beyond "One and Five": Lenders eliminating rigid 1:5 net worth/liquidity ratios for deal-specific frameworks assessing actual construction risk and problem-solving capacity.
REO Schedule Scrutiny: Increased focus on sponsors' capital calls and underwater projects that could rapidly drain liquidity.
Portfolio Concentration Risk: Sponsors with 100% exposure to single asset classes that faced macroeconomic pressure struggled most; diversification now critical.
Integrated Underwriting: Some institutions sizing liquidity and net worth based on total construction exposure rather than generic guidelines.

Opportunities with Uncertainty: Excitement about the bill tempered by questions on timeline to reach full potential.
Subsidy Crisis: Every deal needs subsidies; states must act quickly to develop solutions.
Budget Impacts: Reduced Medicaid/SNAP assistance threatening residents' rent-paying ability.
Immigration Enforcement: ICE raids causing job site shutdowns and subcontractor no-shows.

Slower Timelines: Construction progressing slower across the board.
Subcontractor Shortages: Particularly acute in rural areas; higher buyout percentages required at closing.
Geographic Concerns: Austin, Texas broadly, and Denver flagged; Florida relatively stable.
Vanishing Developer Fee: Minimal or no fee eliminates traditional cost overrun buffer.

Emerging Strategy: REITs monetizing ground leases for upfront capital, but only with direct investors—no multi-investor fund placements yet.
Key Concerns: Limited cure rights, annual hard payments (~5% IO), effectively functions as super-senior debt requiring reduced supportable NOI.
Gap-Filling Tool: Despite challenges, viewed as underwritable solution for growing subsidy gaps.

Consent Rights: Discussion on unanimous vs. super-majority vs. majority requirements.
Rising Demands: More upfront information, pre-screens, and early exit requests.
Anti-Churning Issues: Bank mergers creating tracking problems for preservation funds.
Reserve Questions: Consensus that funds may be over-reserved despite utility when problems arise

Insurance Concerns: Cost increases slowing, but coverage gaps and unaffordable deductibles remain critical. Louisiana still struggling with insurability.
AI for Security: Early success with license plate/facial recognition, fraud detection, and centralized portfolio monitoring.
Max LIHTC Rent Risks: Properties at maximum rents without subsidy face sustainability challenges as costs escalate.
Watch List Growth: Increasing troubled assets and declining cash flows.
Conversion Monitoring: Properties appearing on watch lists within 2-3 quarters post-conversion suggest need for extended monitoring beyond 90 days.

Supply Surge Expected: Both allocation increases and 25% test reduction will boost supply, though state-level factors may mute 4% credit impact.
Investor Thresholds: Approaching ~450 bps spread-to-treasury that should attract economic investors.
HFA Pricing Disconnect: Some agencies imposing outdated QAP pricing requirements.
Mixed Income Revival: Expected return to pre-COVID integration of market-rate and workforce units.
Advocacy Priorities: LIHTC transferability, IRS partnership test reform, CRA credit transferability, secondary market data exchange.

HUD Improvements: Despite shutdown, some perceive better lending-side engagement.
Pipeline Monitoring: Investors tracking deals requiring agency involvement.

Public Welfare Investment Cap: Push to increase from 15% to 20%; survey response critical.
Tax Credit Relief: Eliminate 75% business credit limitation; add three-year carryback.
Duty to Serve: Fannie/Freddie mission, NOT a third investor tier for yield reduction.

Industry Strain: Increased volume will stress investors, syndicators, accountants, and attorneys, delaying completions.