LIHTC Properties NOI Grew 3.3 in 2017

Published by H. Blair Kincer on Wednesday, June 5, 2019 - 12:00am

In 2017, LIHTC properties’ overall expenses grew 2.3 percent while their revenue grew 2.7 percent, according to the Novogradac 2019 Multifamily Rental Housing Operating Expense Report-Survey and Analysis of LIHTC Properties. This difference in growth resulted in the largest year-over-year NOI increase (3.3 percent) seen in eight years. Measures of revenue and net income provide a benchmark to track the growth of success of LIHTC properties. Comparing a LIHTC property’s total median expenses to its total median revenue allows for relative assessment of its viability.

NOI comprised 44.4 percent of total income in 2017, down from 47.5 percent of total income in 2010. Further, from 2010 to 2017, compounded median total expense growth per unit was 2.6 percent, which outpaced the 1.8 percent compounded growth in revenue during that time. In 2017, LIHTC properties’ revenue grew 2.3 percent from 2016. Revenue decreased 0.6 percent in 2011, but has increased each year since. The largest revenue increase was in 2012 (2.8 percent), and 2014 and 2017 had similar increases of 2.7 percent. Overall, since 2012, increases in net LIHTC property revenue ranged from 0.9 percent in 2015 to 2.8 percent in 2012. Though NOI was the highest it has ever been in 2017 at $3,939 per unit, NOI accounted for a smaller share of total income because of expense growth.


Blog Graph Since 2010 Expense Growth Has Outpaced Income Growth
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For the second year in a row, NOI for senior LIHTC properties was lower than that of family LIHTC properties. In 2017, NOI for senior LIHTC properties was $3,903 per unit, the second year since the survey started that senior NOI was less than $4,000 per unit. Until 2016, senior LIHTC properties had higher revenue and lower expenses than family LIHTC properties. This resulted in consistently higher NOI for senior LIHTC properties compared to family LIHTC properties. In 2016, senior LIHTC revenue decreased 2.5 percent from 2015 and was lower than family net income. Senior LIHTC property revenue increased 4.5 percent in 2017, but this was not enough to overcome the decrease seen in 2016.


Blog Graph NOI Continues to be Higher for Family LIHTC Properties
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At the same time, family LIHTC properties saw a 4.7 percent increase in median revenue in 2016, the largest increase observed during the study period, and a 2.2 percent increase in 2017 While NOI for senior LIHTC properties was lower than that for family LIHTC properties, the gap between the two is the smallest it has been since the beginning of Novogradac’s survey. A mere $58 per unit separates senior and family NOI. This is because of the healthy increase in senior LIHTC property NOI and the more modest increase in family LIHTC property NOI. Specifically, in 2017, NOI for senior properties grew 5.3 percent and NOI for family properties increased 2.9 percent. Overall, family LIHTC properties experienced an 11.5 percent increase in median NOI from 2010 through 2017, compared to the 10.7 percent decrease in NOI for senior LIHTC properties during that time.

Learn More

Read more about the cost of operating LIHTC properties and learn what to expect in different situations with the Novogradac 2019 Multifamily Rental Housing Operating Expense Report-Survey and Analysis of LIHTC Properties.