Simcha Ward Session 1

Introduction to Personal Journey and Real Estate Development

  • The speaker shares the experience of moving to North Carolina after the birth of their first child to be closer to family.

  • Introduction to Dion Nelson, CEO of Laurel Street, who played a significant role in the speaker's career.

    • Dion suggested the speaker consider affordable housing as a career path, bridging public finance and multifamily housing.

  • The speaker acknowledges the importance of doing well while doing good in affordable housing development.

Affordable Housing Development Experience

  • Initial work focused on Low Income Housing Tax Credit (LIHTC) developments in Georgia and North Carolina.

  • Significant projects include:

    • Project with South Rome Housing Alliance:

    • Location: Former hot dog factory in Rome, Georgia.

    • Resulted in 82 homes for families in a small town on the outskirts of Atlanta.

    • Project in Charlotte:

    • 82 units for seniors in an affluent neighborhood.

    • Involved Charlotte Housing Trust Fund dollars and collaboration with a market-rate developer for land acquisition.

    • Created a mixed-income community with luxury housing and affordable housing elements coexisting.

    • Notable for its community amenities that promote interaction between income groups.

    • Novel University Place:

    • Development transformed a former shopping center into 309 market-rate apartments with surrounding green spaces.

    • Another Shopping Center Development:

    • 277 units of housing created between a Trader Joe's and Target, with an enhanced pedestrian experience.

  • Personal reflection: The most rewarding aspect is witnessing families building their lives in these developed communities.

Crescent Communities Overview

  • Crescent Communities: A company with a long legacy focusing on community building throughout the Southeast.

    • Previously a subsidiary of Duke Energy, focusing on master-planned communities before pivoting.

    • Current focus involves residential and commercial developments.

    • Key commercial brands include:

      • Axial (industrial)

      • The Yield (life science)

      • Bauer (office)

    • Key residential brands:

      • Novel (class A plus multifamily)

      • Render (premium garden-style)

      • Harman (single-family built-to-rent)

  • Clear market focus is on Sunbelt markets, emphasizing intentionality in operations leading to long-term success.

Multifamily Development Scale and Focus

  • Approximately 10,000 units currently under construction or operational, with a significant pipeline for future development.

  • Specifics for Nashville involve:

    • Two active communities under construction: Render Manchester Farms (309 units) and Novel Richland Creek (277 units).

    • Additional future sites for another 600 units in development.

  • Emphasis on market selection and development criteria:

    • Priority placed on communities with strong job and population growth.

    • Focus on resilient and diversified markets to ensure sustainability of developments.

Development Process Walkthrough

  • A detailed overview of the steps involved in the multifamily development process:

    1. Site Finding: Identifying potential development sites that meet specific criteria, often competitive.

    2. Negotiations:

    • Initiate with a Letter of Intent to purchase land.

    • Sign a Purchase and Sale Agreement.

    1. Due Diligence:

    • Assess legal title, survey boundaries, environmental studies, and site conditions.

    1. Engagement of Professionals:

    • Collaborate with architects, engineers, and contractors for design and pricing.

    1. Investment Planning:

    • Prepare business plans and financial models that are updated through the development process.

    1. Predevelopment Funding:

    • Acquire investment committee approval to spend funds for necessary due diligence.

    1. Capital Raising:

    • Negotiate with capital partners for equity and debt to fund the project.

    1. Construction Phase:

    • Monitor and administer construction processes, ensuring adherence to budgets and timelines.

    1. Leasing and Property Management:

    • Hire a property manager to market and lease the completed development.

    1. Disposition:

      • Engage an investment broker for potential sale once stabilized.

Case Study: Valentine Development

  • Overview of the Valentine project, a mix of market-rate and affordable housing in a suburban setting.

  • Unique features of the project:

    • Developed on a site originally intended for a hospital and surrounded by various essential services (grocery stores, police station).

    • Crescent served as master developer, necessitating government collaboration for road construction.

    • The project had to go through an entitlement process to obtain approval for apartment use.

    • Mixed income and multigenerational housing approaches were emphasized, aimed at creating a sense of community.

Challenges in Development

  • Challenges faced often stem from unique site conditions; for example, dealing with environmental issues like protected species (e.g., streamside salamander) that can affect project timelines.

  • Emphasis on problem-solving skills to navigate unexpected issues.

Development Risk Management

  • Risks typically become clear during due diligence and investment committee processes:

    • Regular assessments of risks and mitigants occur throughout the project lifecycle, especially following site acquisition and during the engineering phase.

Differentiating Product Types in Development Decisions

  • Key differences between build-to-rent and multifamily apartment projects are noted:

    • Different target audiences and investment strategies for each product type.

Conclusion and Advice to Students

  • Emphasizes the importance of nurturing relationships and networking within the industry.

  • Encourages students to pursue meaningful work that aligns with their passion for shaping communities, emphasizing resilience in facing challenges and rejections during their careers.