News
MULTIFAMILY MONDAY
April 25, 2011
| Some say government programs are all about red tape and low income housing creates problems. But over the last 37 years, Boston Capital co-founder Jack Manning, has helped attract thousands of private investors and helped build the nation's largest multifamily property portfolio: 158,947 units with a development cost of $12B. |
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| We snapped Jack (right) in his office with Kevin Costello, who directs institutional investing for the privately held firm. This year, Jack says they have $600M in equity to build about $900M in the affordable rentals that dominate Boston Capital's portfolio. Each property will be new construction or substantial rehab as required by the low income housing tax credits that attract investors and drive the business. The financial crisis slowed business but since last summer, Jack?s found extraordinary interest among investors to buy the tax credits. Public companies find the credits help boost their stock price by increasing their after-tax earnings, Jack tells us. Property debt is low (66% to 80%) so rents can be kept within government guidelines. |
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| Affordable housing acquisitions director Brenda Champy (withJennifer Howard) is looking for properties on the coasts, in the Southwest, the Deep South, Midwest, and West. (We could have written "nationwide," but we get paid by the word.) Boston Capital now has under agreement 39 properties in 18 states representing $240M in equity. Much of its financing comes from private and institutional investors. The days of a buyer?s market (?08, '09) are gone, with investor competition pushing downyields to an after-tax rate of 7%, compared to 10% in 2000, Jack tells us. In the Boston area, the company's buying in Somerville, Malden, and Tyngsboro, locations with transit access and affordable housing demand. Brenda says they aim to add value to communities by delivering services like after-school programs for kids and healthcare for seniors. |
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| Ted Tivers and Mark Dunne are on the smaller, market rate side of the business, with a portfolio of 5,500 apartments. Early in ?08, they sold their privately traded REIT for $260M. Jack had anticipated an IPO, so it was a ?tough decision,? but they knew the market was overheated. For the next three years, they bought nothing, since success in market rate rentals depends on job growth. Now, Jack tells us, they're comfortable getting back in and plan to raise a new fund within a year. In the next 24 to 36 months, they already have the capital to invest $300M to buy about $1B in property, mostly Class-B value-add. In the Boston area, Ted tells us he'll shop within Rte 128, someplace like Quincy, on the Red Line with good services, and in DC, Raleigh, LA, or San Diego. |
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| Jack, a Fall River boy, studied finance at Boston College and his first jobs were financing development. In ?74, when prime was at 12%, he and Herb Collins started Boston Capital by developing condos in Quincy. ?We barely escaped with our lives,? he says. But fascinated by development, they took the safer route of working with government programs. When the tax laws changed in ?86, they found the low income housing tax credit route. |
