Structuring general partner transfers during the compliance period
1 / 13

Structuring General Partner Transfers During the Compliance Period - PowerPoint PPT Presentation

  • Uploaded on

Structuring General Partner Transfers During the Compliance Period. By: Thomas A. Giblin Nixon Peabody LLP. Successfully Completing A General Partner Transfer. Understanding buyer/seller perspectives Tax and business issues Common due diligence traps Obtaining required consents

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about ' Structuring General Partner Transfers During the Compliance Period' - samantha-cook

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Structuring general partner transfers during the compliance period

Structuring General Partner Transfers During the Compliance Period

By: Thomas A. Giblin

Nixon Peabody LLP

Successfully completing a general partner transfer
Successfully Completing A General Partner Transfer Period

  • Understanding buyer/seller perspectives

  • Tax and business issues

  • Common due diligence traps

  • Obtaining required consents

  • Working with project lenders and investors

  • Processing general partner transfers: the investor perspective

Understanding seller s motivation to sell
Understanding Seller’s Motivation to Sell Period

  • Retirement/family succession issues

  • Corporate merger/sale/restructuring of developer

  • Workout/removal situation

  • Death/incapacity/bankruptcy

  • Insufficient access to additional resources

Understanding buyer s motivation to buy
Understanding Buyer’s Motivation to Buy Period

  • Property management fees

  • Efficiencies with nearby projects

  • Future acquisition/rehabilitation transaction

  • Unlocking residual value (conversion to market rate/condominium)

  • Charitable purpose/mission for non-profits

  • Access to debt/equity not available to current owner

Ownership transfers business issues
Ownership Transfers: Business Issues Period

  • Structuring the business deal

    - Identifying assumed obligations

    - Release/indemnification

    - Representations and warranties

  • Addressing deferred maintenance/repairs

  • Partnership restructuring issues (refinancing/debt restructuring)

  • Negotiating management transition

  • Scope of due diligence review

Common due diligence traps when acquiring partnership interests
Common Due Diligence Traps When Acquiring Partnership Interests

  • Real estate/property due diligence

  • Tax credit due diligence

  • Financial due diligence

Real estate property due diligence
Real Estate/Property Due Diligence Interests

  • Understanding physical condition/deferred maintenance

    • Physical needs assessment

    • Phase I report

  • Confirm no ROFR/Options have been granted

  • UCC/litigation/judgment searches and title “date down” reports

  • Review of material contracts

    • Termination fees/assignability

    • Construction warranties

  • Rent rolls

  • Identify deed restrictions/use agreements that survive repayment of loan

Tax credit due diligence

  • Tax credit application/carryover/LURA/regulatory agreements/8609s

  • Tenant files (especially 1st year files to confirm minimum set-aside)

  • IRS Form 8823 (non-compliance reports)

  • Use of IRS Form 8821 (Tax Information Authorization)

Financial due diligence
Financial Due Diligence Interests

  • Reviewing tax returns and financial statements

    - Unpaid tax credit adjusters

    - Accrued fees and loans to partners

    - Unpaid development fees

  • Understanding accrued soft debt and other financing issues

    - Accrued interest (especially with soft debt)

    - Loan terms/balloon payments

  • Understanding existing capital account balances

Understanding consent requirements
Understanding Consent Requirements Interests

  • Lender

  • Tax credit agency

  • HUD

  • Syndicator/investor

  • Other partners

  • Local jurisdiction (if tax exemption/PILOT)

Working with project lenders
Working with Project Lenders Interests

  • Reviewing transfer restrictions/due on sale clauses

  • Obtaining required lender consents

    • General partner interest

    • Management agent change

  • Negotiating application and transfer fees

  • Obtaining “no default” letter

  • Transferring any key principal/guarantor liability

  • Reserve funding

Ownership transfers tax issues
Ownership Transfers: Tax Issues Interests

  • Managing exit tax liability

  • Calculating recapture liability/obtaining recapture bond

  • Reviewing partner capital account balances

  • Addressing future reallocations

  • Phantom income

  • Debt restructuring/debt forgiveness

  • Other state and local tax issues

    • Termination/liquidation under state law

    • Real estate transfer tax issues

Processing ownership transfers the investor perspective
Processing Ownership Transfers: the Investor Perspective Interests

  • Understanding reasons behind the proposed transfer

  • Underwriting experience and financial strength of replacement general partner

  • Status of reporting obligations/adjusters/asset management fees

  • Assumption of all general partner obligations/replacement guaranties

  • Underwriting new accountant/management agent

  • Exit strategy

  • Consents (lender/agency consents)

  • Impact on other deals with investor

  • Insurance issues