Stability describes the AHF 50 owners this year, with familiar names continuing to populate the list, which is based on the number of affordable units owned as of Jan. 1. In fact, the top 10 look much like they did last year, with nine of the same firms returning.
At the top, once again, is The Michaels Organization, of Marlton, N.J., by far the largest owner, with 46,405 affordable housing units in 355 developments.
The firm increased its affordable housing portfolio in 2013 by beginning construction on 571 new units and acquiring another 216. At the same time, Michaels expanded its reach into other fields, increasing its student housing development and military housing management efforts.
Together, the AHF 50 owners hold more than 563,000 affordable housing units across the nation. Many of the firms have projects that are nearing Year 15 and thus are developing strategies to deal with these aging communities.
“I can’t think of one state where we operate that has a cohesive preservation financing strategy,” says Andrew Crossed, executive vice president at Conifer Realty, which ranks No. 13 on the owners list. “It makes it difficult. And the amount of those projects that require redevelopment out there today is daunting.”
He says he would like to see more preservation projects getting done and thinks the Department of Housing and Urban Development’s Rental Assistance Demonstration (RAD) program will help.
“HUD is happy with the program, and I think there are indications that they’ll come out with the next generation of RAD that will really help,” Crossed says.
WinnCompanies, No. 15 on the owners list, also is a long-term owner of its affordable housing stock and is looking at what to do with its projects 15, 20, and 30 years down the road. The company took advantage of the low–interest rate environment last year to refinance and rehab several projects. As a general rule, says Gilbert Winn, managing principal, the company has been refinancing the older properties with Federal Housing Administration or HUD financing, but it has also used 4 percent low-income housing tax credits. “Generally speaking, we’re refinancing because we believe these are properties in good shape and we can maximize value throughout the company,” Winn says.
In all, 102 firms participated in the voluntary survey that determines the rankings. The owners also shared their thoughts on the state of the industry. Going into the new year, the housing executives revealed they’re most concerned about fewer local and state resources.
AHF also lists the top firms completing affordable housing acquisitions and substantial rehabs in 2013. Hunt Cos., of El Paso, Texas, leads the acquisitions list after taking over 9,299 affordable units as a general partner last year. Related Affordable, of New York City, tops the rehabs list after completing substantial rehabs on 1,694 units.
Top 50 Owners Spotlight
#15 Winn Companies
WinnCompanies has earned a reputation over the past four decades as a leading developer and owner of affordable housing.
In addition to transforming historic buildings into mixed-income and mixed-use communities, the Boston-based company has made a commitment to sustainability.
“The most green thing that can be done in real estate is the reuse of a building,” says Gilbert Winn, the firm’s managing principal.
In recent years, WinnCompanies has converted 17 historic mills into residential and commercial spaces. Winn says the company adheres to green checklists on its new developments, insulating outside walls and using no-VOC paints, sustainable landscaping, and other such features.
In 2013, Winn partnered with the Department of Housing and Urban Development (HUD) and the Department of Energy on President Obama’s Better Buildings Challenge to reduce energy usage across its multifamily portfolio. The first step of the 10-year commitment is to establish a baseline for water, gas, and electric usage in all its apartments and common areas.
Once the baseline is established, the company will start with the low-hanging-fruit fixes, such as lighting and water conservation improvements, with quick paybacks. Then, it will work with HUD to identify financial incentives for larger energy-efficient improvements, such as insulation, replacement windows, new HVAC systems, and new boilers.
“Eventually, our target is to cut all energy usage by 20 percent,” says Winn. — Christine Serlin
#30 Related California
Affordable housing development has been more challenging in California since the elimination of redevelopment agencies at the end of 2011. To make up for their absence, Related California has adopted a multifaceted approach to grow its affordable housing portfolio, says COO Frank Cardone.
The for-profit company, based in Irvine, Calif., has focused on the strong relationships it’s built over the years with municipal and county officials, and that repeat business has helped keep the company active in localities where it had worked in the past.
It’s built partnerships with landholders throughout the state who have an interest in affordable housing, as well as home builders with inclusionary housing regulations to satisfy.
And Related California has continued its expansion into Northern California. The company always did business in the area, but it lacked an on-the-ground presence until it opened an office in San Francisco three years ago. It has affordable and market-rate developments in the pipeline in Berkeley, Oakland, Palo Alto, Richmond, Sacramento, San Francisco, and Santa Clara.
“Bottom line is, as a company, we’re experiencing major growth in Northern California,” says Cardone.
Related California also is focused on improving its portfolio operations and efficiencies.
“Recently, we expanded our commitment to our existing portfolio by bringing in a senior asset manager to bring a fresh approach to both property and asset management.” — Christine Serlin
#38 The Pacific Cos.
For The Pacific Cos., based in Eagle, Idaho, 2013 was the most profitable year in its 16-year history.
Caleb Roope, president and CEO, attributes that success to several factors. The company, which leaves its developer fees in a project until all the risk is gone, received the fees on all of its American Recovery and Reinvestment Act projects last year.
He says the company also saw economic improvement in cash flow and operating efficiencies on larger developments.
Another highlight has been Pacific’s continued diversification into charter schools and market-rate housing.
“[Diversification] is a great story for bankers, lenders, and investors,” says Roope. “And it provides us the versatility to execute a variety of project types.”
One of the biggest challenges to market-rate and charter school development is financing, but the firm plans to raise $30 million in private capital this year.
Roope says the company also is planning to merge its affordable housing and charter school expertise. In pre-development in Huntington Park, Calif., is an Aspire K-5 charter school, which is expected to be under construction by February 2015. The company then plans to build 38 units of mixed-income housing, with some of the market-rate units set aside for teachers, on top of the school.
New affordable housing will continue to be a key focus for Pacific this year. It expects to start 11 affordable projects with 803 units. — Christine Serlin