James Simmons CEO & Founding Partner Asland Capital Partners

0:00 Speaker 1 Good morning. This is Mike Stolen for the Stolar Real Estate Report. What’s happening in affordable housing? We need affordable housing throughout the city, but there are not too many people doing work on affordable housing. I have to know about the tax ramifications and other points of interest. So today I brought my friend Jim Simmons, who is the

0:20 founder and CEO of Aslan Capital Partners. Thanks for being here. Thank you for having me, Mike. So I hate to put to you in a jam, but what’s happening with affordable housing? Where’s it being done? We don’t have much land, do you? How do you get to build?

0:38 Speaker 2 So the good news, Mike, is that it is on everyone’s radar. I don’t think that you’ll find a person who does not believe that there’s a housing crisis, not only here in New York, but across the United States.

0:49 There’s an extreme supplying demand. In balance, you have more people than we have housing units, and that by definition drives up the costs, and people who are at the lower end of the economic scale have the hardest opportunity to pay for high quality housing.

1:09 Speaker 1 So what’s the mission of your company?

1:12 Speaker 2 Our mission is primarily preservation of existing housing, and there is naturally occurring affordable housing, which traditionally have been in Upper Manhattan and the outer boroughs. And then there is by contract or by definition, affordable housing, which has some regulatory oversight, which says that there’s a cap on reds and what do you both?

1:36 Speaker 1 So what about this one hundred percent of AMI at the condition senior housing? Let’s talk about that.

1:43 Speaker 2 Yeah, so there’s a stratification under the definition of affordable housing with a small A deeply affordable is approximately thirty percent of AMI. Biddle income is anywhere from one hundred to one hundred and forty percent of AMI. And I think, as to others, that there has been focused on a deeply affordable. There has been less focus on the middle

2:09 income spectrum, such that those individuals who are actually working for a living, sanitation workers, ambulance drivers, police fire, they’re having an increasingly difficult time in staying close to their jobs.

2:25 Speaker 1 What about senior housing?

2:27 Speaker 2 Senior housing as well, those are the most vulnerable, particularly from an inflation perspective, because they are often living on fixed income and incomes, and as we know, the inflation rate of the last few years has been detrimental to their staying power. So there has been a concerted effort I think by city officials to focus on senior housing

2:51 because once they retire, they don’t long getting any real raises.

2:57 Speaker 1 An Now, didn’t you recently get involved and do a job on senior housing up in the Bronx. We did.

3:03 Speaker 2 We delivered one hundred and fifty three units in partnership with HPD, which is a city agency in the Soundview section of the Bronx, and that model worked very well. We owned the land, we contributed the land, We did low income housing tax credits, We have permanent affordability.

3:24 Speaker 1 We are in the middle of Lisa as we currently speak. And how does somebody get in an apartment in that building that it’s lottery like?

3:33 Speaker 2 So there’s a city run website.

3:35 Speaker 1 That one Housing.

3:37 Speaker 2 Connect and one has to put their their name in and then once your name comes up, you come in, you tour. If you like the unit, you can move in. But there’s a multi multi year backlog in terms of supply and demand.

3:53 Speaker 1 Now, well, let’s talk about Rivington that you did in twenty nineteen sixteen, twenty sixteen.

4:00 Speaker 2 That was a preservation transaction. It was a distressed asset that we acquired. We structured a transaction with the City of New York where we got tax incentives to provide very very long term affordability win win scenario. We injected a large amount of capital to make it what I would define as best in micro market where it’s affordable

4:26 to middle income New Yorkers. Again, where I said, there’s probably one of the biggest needs.

4:33 Speaker 1 So how do you develop, how do you find the property, and how do you accomplish building this with difficulties? I mean if you didn’t have the tax credits or are the things this couldn’t be done correct?

4:45 Speaker 2 That’s correct, and there is a long line for tax credits. And what you have to do is you have to think of a project or conceive a project, meet with the regulatory authorities, agreed to a plan, getting a queue, get approved, build it, and lease it. So the total period of time from start to finish of our transaction

5:12 of Bronx was probably about six years.

5:14 Speaker 1 Let’s talk about the Nitscher projects.

5:17 Speaker 2 Yes, so Nightscha realized that being in the business of managing its desperately in need of investment housing stock could probably be better better done in partnership with private owners and so it envisioned the Knightscha Pack program.

5:39 Speaker 1 Of which we are a party. Two.

5:41 Speaker 2 We closed on our first Packed award.

5:43 Speaker 1 Uh just this past August.

5:46 Speaker 2 We’re in the process of doing a full gut renovation of a public housing complex in the Bronx, four hundred units. Three years from now. Their units will be brand new. We’re doing well rehab, They’re going to have WiFi, upgraded security.

6:03 It will be one hundred percent a place where I would be happy to live myself. So who’s moving into these properties? How they I mean, we’ve discussed housing connect and other things, but who’s moving in? How do other people afford themselves? If it’s not through the housing connect, well, it has to be through the housing connect, you know

6:26 it’s it is the most vulnerable New Yorkers. The backlog was tremendous prior to the migrant crisis, which will ultimately exacerbate the problem. So to the extent that we can maximize the ability to not only preserve but create additional affordable units, the city must be all oars growing in the same direction to make that happen.

6:55 Speaker 1 Can we see a new housing in Eastern New York in a similar amount of to the housing in the Bronx.

7:03 Speaker 2 I am of the opinion that they are no longer any bad neighborhoods in New York City. Some might argue that that’s a negative thing, but I think that all New Yorkers deserve safety, they deserve clean streets, they deserve the same things that we do here in Manhattan Park Avenue on Third Avenue where we are now.

7:25 Speaker 1 You have you’ve been in partnership with Goldman. Sachs explain that Goldman.

7:30 Speaker 2 Has been a tremendous partner through their Urban Development Group. We have. Embarked on several affordable preservation and development projects. They in a finance community, understand that you can do well by as well as doing good. They’re not mutually exclusive, and we actually believe for our money and for our vestors’ money, that you can achieve outsized risk adjusted the returns. And

8:01 what I mean by that is we’re taking what we believe to be minimum amount of risk because of the government guaranteed portion of rent which is being paid on behalf of the resident and our risk is just operational as well as our ability to either build a renovate a project.

8:23 Speaker 1 Why does the eleven A program eleven A, Yeah, It gives one the ability to negotiate with the city.

8:37 Speaker 2 Parameters in which an asset will be affordable or not, as well as, in certain instances, the ability to build more than what you.

8:45 Speaker 1 Would ordinarily build. So, where do you see twenty twenty five with regard to new affordable housing growing?

8:55 Speaker 2 Look, I certainly hope. So if we’re in the middle of we will be in the middle of a mayor rex. I can’t imagine a candidate that does not put that top of their list of priorities. So to the extent that it is at the top of the list, hopefully the funding will follow.

9:16 Speaker 1 Okay, I’d like to thank Jim Simmons for being here today. Thank you, Mike