CAPREIT made headlines with its acquisition of a 978-unit affordable housing portfolio in Richmond, Va., last year.
It’s one of the big moves the firm has made since Andrew Kadish became president of the Rockville, Md.–based firm in 2015.
Kadish shares why that deal was good and what’s coming up next for a firm that has nearly 14,000 affordable and market-rate unitsthroughout several regions, including the Mid-Atlantic, the Southeast, northern Midwest, and Texas. CAPREIT has also entered California, where it owns and manages several properties in the Bay Area and is looking to expand.
How does affordable housing fit into your business and its future plans?
Affordable housing is a core part of our business line. At this juncture, we’re about 50-50, give or take a couple of percentage points, in terms of our market-rate and affordable housing holdings. I would say for the next several years, it’s probably going to be along those 50-50 lines. It may be skewed a little more toward affordable holdings due to the insane and tremendous focus on value-add market-rate deals in the landscape right now and the dearth of affordable housing stock and workforce housing.
What are your goals for this year?
On the affordable side, we’re looking forward to increasing units under management, both in our own communities as well as our third-party management platform. We manage several thousand units for clients right now, both affordable and market-rate.
In addition to the acquisition and management activity, we have a great training program for our associates, but we’re looking forward to increasing more tech into our training. More videos, more webinars, and more resources dedicated to training our associates. We think it’s going to really help us out especially on the compliance side of the equation. Our compliance staff is all in-house. We do an excellent job now, but we feel we can do even better. We want to get more training out to our associates, not only on the management side but also on the maintenance and preventative maintenance side. Furthermore, it will help us respond to disability questions and fair housing regulations.
What did the acquisition of the nearly 1,000-unit Virginia portfolio say about CAPREIT?
It said several things about us as a company in the affordable housing arena. First and foremost, it was an exemplary acquisition for us. Our acquisition strategy is focused on secondary and tertiary markets, and Richmond is absolutely a secondary market where we think we excel.
No. 2, it demonstrates CAPREIT’s commitment to acquiring and managing affordable housing stock as a core part of our focus. No. 3, it demonstrates CAPREIT’s ability to acquire a large portfolio. It provides a measure of calm to those sellers out there and to the brokerage firms that are looking for a good buyer who is able to complete a large acquisition such as this.
Is CAPREIT a family business?
My dad, Dick Kadish, started the firm back in 1993 with Ernie Heymann, who serves as the chief investment officer, and Rick Band, senior vice president of acquisitions. They’re all still with the firm. My dad bumped himself up to board chairman when I was appointed president. My sister, Jennifer, is chief administrative officer.
Has affordable housing always been part of the business?
We started acquiring affordable communities around 1995 or 1996. Those were 80/20 deals (where 20% of the units in a property are affordable). We later hired Marty Bershtein, who used to run the tax credit program at the New Jersey Housing and Mortgage Finance Agency, and he’s been our tax credit guru. When he goes to affordable housing conferences throughout the United States, his name is not Marty. It’s “Marty from New Jersey.” Everyone knows him as “Marty from New Jersey.”
Best recent move made by the company:
We’ve dedicated a tremendous amount of resources, both financial and time, to move the company onto the RealPage software platform. This has been a longtime coming. With my introduction as president, I wanted a focus to be on the advent of tech—not only in the accounting space but also into the marketing, maintenance, due diligence, and acquisition teams. If we were going to promote ourselves as state of the art, we needed to back that up by making those financial outlays and ensuring we were at the forefront of the tech revolution.
What issue have you been spending the most time on this year?
That would probably be it—incorporating technology into the backbone of our company.
When you visit a property, what do you look for?
The first thing is I don’t go into the office or clubhouse immediately. I often do what we refer to as the “circle test.” That’s basically making concentric circles around the community, usually in a three-mile, one-mile, and then quarter-mile basis. It helps to know what’s out there, meaning apartment competitors, retail, schools, new and old home developments.
Once on-site, I like to drive around the parking lot and see the state of maintenance at the property. Are the lawns edged? How do the roofs look? Are the lights on during the day? I’m able to gauge the temperature of whether you have a dedicated maintenance staff and whether the community manager is worth his or her salt. Finally, I will go into the clubhouse and meet with the leasing staff and or community manager. If it’s a warm and inviting atmosphere, they will greet you and shake your hand. That makes a wonderful first impression.
Name a favorite design feature or amenity at one of your properties:
I’m reminded of a property we acquired in Ann Arbor, Mich. It’s a great market, but this property had a clubhouse that had a wood theme and looked like a pirate ship. It was awful. My head of renovations was so dedicated and so convinced that he could change the look and feel. Here, we are a year later, and it looks beautiful. All the credit goes to the construction team here. It’s a remarkable difference.
If you unexpectedly had the afternoon off, where would we find you?
I have a 3 ½-year-old son, Jacob, and a 6-year-old daughter, Rachel. I would be doing one of two things. I would be reading stories with Rachel, who is in kindergarten and a great reader already. Jacob is an unbelievable basketball fan and a pretty good player at 3 ½, so we would be playing basketball at home.