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Some say government programs are all about red tape and low-income housing creates problems. But Boston Capital co-founderJack Manning has helped attract thousands of private investorsthe past 37 years and built the nation’s largest multifamily property portfolio: 158,947 units with a development cost of $12B.
Boston Capital's Kevin Costello and Jack Manning
Bisnow Boston reporter Susan Diesenhouse 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 a 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 foundextraordinary interest among investors to buy the tax credits. Public companies find the credits help boost their stock price by increasing after-tax earnings, Jack tells us. Property debt is low (66% to 80%) so rents can be kept within government guidelines.
Boston Capital's Brenda Champy and Jennifer Howard
Affordable housing acquisitions director Brenda Champy (withJennifer Howard) is looking for properties on the coasts, in theSouthwest, the Deep South, Midwest, and West. (We could have written "nationwide," but we get paid by the word.) Boston Capital now has 39 properties under agreement 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 down yields to an after-tax rate of 7%, compared to 10% in 2000, Jack tells us. Boston Capital is interested in investing in NY's affordable housing, specifically in the five boroughs and in Long Island, and has invested more than $30Mover the past 24 months in affordable housing located in Queens,Harlem, Staten Island, and the Bronx. It also have a strong need forWestchester and upstate.
Boston Capital's Ted Tivers and Mark Dunne
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 wasoverheated. 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 fundwithin 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. The firm's also interested in transit-oriented new development and acquisition opportunities within commuting distance to Manhattan or other greater-NYC employment centers.