Stability is the word from Standard & Poor's when it comes to unenhanced and unsubsidized affordable multifamily housing.
"We are starting to see stability," S&P's Mikiyon Alexander said at the National Housing and Rehabilitation Association's annual meeting in Bonita Springs, Fla. "Our overall credit concerns are starting to stabilize."
Alexander, who is a director and sector leader for the rating agency's multifamily housing in the tax-exempt housing and structured group, also said the stable performance the company saw in project-based ratings last year can be expected to continue this year as the pace of downgrades and outlook revisions has slowed and new issuances has increased.
In a public finance report card released at the meeting, S&P said 13 of its 32 ratings in 2009 – 41% – were downgraded. But last year, only nine of its 27 ratings – 33% -- were revised downward due to financial stress caused by declines in net operating income. "The sector has gone through a lot," said Alexander, "but downgrades have gone down tenfold."
Regarding Section 8 properties, the report said the number of issues in the ‘A' rated category was up last year. There also was a large shift to the "Not Rated" category from ‘BB' and ‘B' categories as the number of investment grade issues increased to 44% in 2010 vs. 34% in 2009 and 33% in 2008.
"We're starting to see stronger deals," the S&P executive commented, noting that more than a third of the outstanding Section 8 bond issues have contract rates greater than fair market value.
