Lument’s Suzie Cope was among a panel of experts asked to skip the crystal ball predictions about the future of interest rates and instead focus on deal structures and the debt landscape during the Novogradac 2025 Affordable Housing Conference in San Francisco.
Accepting the fact that the movement of rates is out of everybody’s control, the discussion quickly turned to what types of structures work in today’s dynamic market. Cash-back bond forward structures, which provide long-term bonds at interest rates that change when a development exits the construction phase and begins leasing, should be explored when discussing financing options, panelists agreed. Cope stressed the importance of keeping a watchful eye on rates and readjusting projections accordingly while developing a transaction, as projected income will change with market volatility.
“That’s important because you may think you’re getting an extra $1 million day one and it could be $2 million at the end of the deal,” said Cope. “It could be half a million.”
Other topics discussed included the benefits of HUD financing, the emergence of innovative bond structures, and the importance of sourcing soft debt from multiple levels (i.e., city, county, state, etc.).
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