Download Basil Rallis: Markets for General Partner Transfers During

Markets for General Partner Transfers
During Compliance Period
General Partner Transfers: The Buyer’s View
Basil Rallis
Tax Credit Property Disposition:
A New Generation of Rights, Obligations and Opportunities
Through Year 15 and Beyond
October 11 & 12, 2007
L.P. Initiated
--LP has removed original GP and is selling the GP rights
Positives
– Single point of negotiation
– Same goal of moving towards a closing
– Rarely involved personnel issues
L.P. Initiated Continued
Negatives
–
Often challenged properties are paired with
performing…the Good, the Bad and the
Ugly…dealing with negative capital accounts, and
foreclosure risk.
–
Non-affiliated, or Non-profit partners that need to
consent, may feel cut out of the transaction.
L.P. Initiated Continued
Mechanics
–
Fairly straight forward accounting issues, without
many surprises.
–
LP understands the tax and accounting issues.
G.P. Initiated
-- Successful GP is looking to sell their various economic interests
Positives – It’s a deal! That is Always A Plus…
–
–
Usually represented by professional who can
manage the process and expectations…It is not
closing in 30 days!
Some opportunities to add talented staff to your
organization
G.P. Initiated Continued
Negatives – The Consent Process…
–
–
–
The LP approval – The need to improve upon their
current position, and settle up with the departing
GP.
Does The LP Approval change the economics for
the buyer, or seller? How to “adjust” and not
renegotiate.
Pushing on a string – No control on timing;
motivating the required consenting parties.
G.P. Initiated Continued
Mechanics – Not So Straight Forward…
–
–
–
–
Price allocations – Hot Assets (deferred developer
fee) GP Interests, receivables.
Reinterpreting the Partnership Agreement; Are the
receivables, really capital?
Cleansing the Balance Sheet – Proration of
expenses, capex requirements – whose dime?
Controlling slippage – Declining operations
associated with protracted closings
Markets for General Partner Transfers
During Compliance Period
General Partner Transfers: The Buyer’s View
Basil Rallis
Director
Cascade Affordable Housing
Tax Credit Property Disposition:
A New Generation of Rights, Obligations and Opportunities
Through Year 15 and Beyond
October 11 & 12, 2007