A longtime multifamily development firm begins a new phase this year.
Herman & Kittle Properties has become Kittle Property Group, reflecting an ownership transition to president and CEO Jeff Kittle. The friendly transaction was several years in the making and spurred by the retirement of partner Tom Herman in 2011.
Kittle recently completed the buyout of Herman’s interest in the operating company as well as 41 properties with nearly 3,800 apartment homes last year.
Overall, Kittle Property Group owns and manages more than 18,000 apartment homes in 19 states and has invested capital of more than $2.5 billion.
The Indianapolis-based firm ranks No. 7 on the AHF 50 list of top developers after starting construction on 1,442 affordable housing units last year. Kittle Property Group is also No. 11 on AHF list of the nation’s top owners, and it’s the No. 3 firm completing acquisitions as a result of the ownership change.
The new company will be more similar than different from the prior firm, which had roots going back to 1948, according to Kittle.
“Our vision of a resilient company that’s built to last and provides homes for 35,000 families remains the same,” he says. “Our team members remain the same. Our development, construction, and operation of affordable and workforce housing across the country remains the same.”
However, there’s more than just a name change. The firm has a new headquarters with expanded office space, and the new common ownership of the company and a portfolio of about 160 properties will allow for greater efficiencies and flexibilities.
Looking ahead to this year, Kittle Property Group has three main priorities. The first is helping residents who are on the eviction bubble because of the COVID-19 pandemic and economic downtown. Last year, the firm was able to help about 900 families obtain rental assistance, and that continues to be a focus as Kittle tracks the progress daily.
The company will also be working to complete about 15 projects under construction across the country. “It’s critical we execute on that for all of our partners in a difficult construction time,” he says, noting the recent volatility in pricing for lumber and other materials.
The third priority is to execute on the firm’s development pipeline. The goal is to close on eight to 10 developments, which would exceed last year’s activities that totaled about $400 million in development.
One move that the company has made is to utilize “prototype designs” for its developments. These standardized plans aim to achieve time and cost savings on the front end as well as the ongoing operations. “We want the properties to be durable and resilient,” Kittle says. “That’s part of our prototype design that they’re going to perform well during the operations of the property.”
The firm has several prototypes that it can adapt with a mix of different unit sizes, and it’s looking to create additional designs for its workforce housing developments.In addition to its development activity, Kittle Property Group has a deep portfolio of low-income housing tax credit properties. It bought out about 27 limited partners from those developments last year and expects to buy out about 15 partners this year.
“Jeff has put together a talented and experienced team in a business that we all know has a lot of complexities to navigate,” says Kyle Kolesar, senior vice president at KeyBank Community Development Lending and Investment. “The fact that they are a vertically integrated developer and manager allows them to have oversight on all aspects of a deal and their portfolio.”
This has been particularly visible during the pandemic, according to Kolesar, noting that the company has been very proactive in managing its properties and bringing resources to residents whether it is health and wellness programs or needed rental assistance.
“I think Jeff’s start-to-finish oversight of his company and his properties allows them to be successful and continue on the growth path that they’re on,” he says.
KeyBank, one of the firm’s many financial partners over the years, has been involved in more than 20 of the company’s developments.
Kittle says he’s excited to continue to work with his residents, business partners, and entire staff as they continue to write the firm’s story that began in 1948.
“While a little more normalcy would be great this year, I have been around long enough to know that there is not really a normal, and you need to be able to react quickly to solve problems,” Kittle says. “We have a fairly clear path on the pandemic ending with the widespread vaccine distribution, but we are now dealing with increased commodity prices making construction difficult, land pricing going up quickly, interest rates rising, and some dislocation in the tax credit equity market with more supply of tax credits but the same amount of buyers. However, I enjoy solving problems and figuring out ways for Kittle Property Group to execute on our business in the face of challenges.”
