Standard & Poors Lowers Cap Rates for Affordable Multifamily Developments
Standard & Poor's Ratings Services last week lowered the cap rates used for valuing affordable multifamily housing projects to reflect downward trends in cap rates due to the long-term drop in interest rates and lower cap rates being demanded by buyers of multifamily properties. The new cap rates are: 8.25%-9.25% for urban properties and 8.75%-9.25% for suburban properties. The rating agency says it will reserve the lower end of the cap rate range for new construction low-income housing tax credit (LIHTC) properties or non-subsidized properties receiving a quality ranking of 2 or higher by Standard & Poor's. More information will be available in the April issue of The Valuation Report.