Affordable Needs While interest rates and government policies spawned Wood Partners’ interest in condos, demographics drive the company’s other moves. Wood himself studies demographics trends, a pursuit that has left him convinced of the opportunities in affordable housing. “Affordable housing is needed everywhere,” says Wood, whose company has completed three affordable housing projects with three more in the pipeline.
To enter the affordable arena with strength, Wood Partners turned to Bernard Felder, luring him from Bank of America’s community development group to handle affordable housing finance at Wood. “We had guys doing the architecture, engineering, construction, and entitlements in the local markets, but we didn’t understand affordable housing finance,” Jerry Durkin, a Wood Parners director, says.
Affordable housing, with its need for tax credits and its layered financing structures, is very different from Wood’s market-rate and condo developments. So Felder works with states, cities, and counties on affordable projects and develops a pipeline of equity investors. “The traditional equity investor is often not involved in providing equity for tax credits,” says Felder, a director at Wood Partners. “So the obvious first move was to expand our equity investor pool.”
So far, the company has won over AIG SunAmerica, PNC Financial, Southtrust Community Development Corp., and Prudential as investors. “The partnership agreements and negotiations necessary for tax credit agreements are as close to brain damage as you can get,” Felder says. “Going through that brain damage with three to five core investors that have an appetite for your product can make the overall planning a lot less stressful than it already is.”
Since Wood holds affordable properties much longer than it usually keeps market rate apartments, the property management decision becomes even more critical. The company’s choice? The Lane Co. in Atlanta, which handles many of Wood’s affordable properties. “We aim to partner with those management companies that have a strong experience in mixed-income and 100 percent affordable housing communities,” Felder says.
Young to Elderly Wood Partners also had its eye on demographics when it decided to enter senior and student housing. “More kids are pushing into university systems,” Wood says of the company’s rationale for adding student to its diverse product mix. “University budgets are stressed, and housing is a low priority.”
It is a challenge for the private sector as well. Student housing requires multiple-bed apartments, single-bed leases, lots of community space, plenty of parking, and sometimes even resident transportation to campus. To handle these needs, the company partners with Jim Shaffner, one of Simpson’s former colleagues and an experienced manager of student housing who now is a partner at University Housing Group in Charlotte. But the company is still testing the student market, not even hiring a full-time employee to head it up. “Student housing can be very successful, but it needs to be in the right place,” Wood says. “To us, it’s not something we do everywhere, but we do it where we find a select opportunity.”
At the other end of the generation spectrum, baby boomers are driving the company’s interest in senior housing. But the unit mix for this product differs from what the company usually builds. “There are more are people living alone,” Wood says. “You can have a shuttle service. And, you will have larger common areas where people can gather for a seminar or to play cards.”
As with senior housing, the company went outside for expertise, hiring a consultant, Kimberly Solbakk, and a senior manager, Steven D. Bell and Co. in Greensboro, N.C., to support these properties. So far, Wood Partners has one project under construction and two more on the way. Yet it won’t push too far beyond construction and ownership. “Our entry into that business is on the front end,” Durkin says. “We are doing Class A garden apartments focused on the over-55 crowd that needs extra services.”
