SHIKO UEDA, Nikkei staff writer
TOKYO — Japanese financial group Orix will acquire a U.S. fund that specializes in tax credits awarded to developers of low-income housing from Boston Capital, in a deal estimated at $150 million, Nikkei has learned.
The Tokyo-based company will assume management of just over $7 billion in these assets through the deal, roughly doubling its holdings to about $15 billion.
Orix hopes the larger portfolio boosts fee income, streamlines administrative tasks and attracts new deals in a segment seen as relatively safe from the economic impact of the coronavirus pandemic.
The U.S. Low-Income Housing Tax Credit was enacted in 1986 to encourage private-sector investment in building and renovating affordable housing. The credits can be claimed for 10 years, but developers often sell them to investors to finance new projects.
Orix entered this segment of real estate finance in 2016 with the acquisition of Boston Financial Investment Management. Orix is listed on the Tokyo and New York stock exchanges, and it has operated a U.S. subsidiary since 1981.
Many U.S. residents of affordable housing receive government assistance or Social Security payments. This means developers involved in the projects have continued to earn stable rental income despite the economic downturn. A framework also exists to ensure investor profits.