Protecting Your Hard-Won Assets Through Strong Asset Management

Transcription

1 Protecting Your Hard-Won Assets Through Strong Asset Management Industry perspectives: Carl Dudeck, Director of Housing Management, PHFA Danny Green, Asset Manager, Enterprise Nancy Batchelder, Acting Director of Property Management, Housing Development Corporation MIdAtlantic

2 Housing Finance Agency Perspective

3 Best Practices

4 Establish a preventative maintenance program To manage capital repairs and replacement needs Train staff Pay staff an appropriate wage

5 Written policy for turnover of vacant units Policy to keep the property fully occupied Maximize Revenue Establish written eviction procedures

6 Create a sense of community Provide resident services Integrate the property with the surrounding community Secure the property

7 Set and manage an annual budget Work to obtain yearly rent increases Review real estate taxes on an annual basis Review your vendor contracts and insurance bills annually

8 Ancillary Income Become as energy efficient as possible

9 Partners Multifamily Housing Professionals (MHP) Asset Management Property Management Best Practices Examples of Best Practices

10 Asset Management Committee Meets quarterly to discuss any issues regarding our properties. Representatives from Housing Management, Legal, Finance, Accounting and Development.

11 1. Review troubled properties report Negative cash flow, negative working capital, RFR balance less than $2,000/unit and occupancy. 2. Occupancy concerns Listings of properties with occupancy under 95% and properties in rent up.

12 3. Options to resolve troubled properties Resizing first mortgage, revising interest rate, extending the loan term Providing additional loan funds, if available Working with the syndicator Helping to locate a buyer 4. Discuss new Agency financings. 5. Discuss new loan programs.

13 We invite you to join us for the 2018 PHFA Multifamily Affordable Housing Conference: June 27 29, Kalahari Resort and Conference Center, Pocono Manor, PA. For more information please contact Melissa Medernach at or

14 Carl R. Dudeck, Director of Housing Management Pennsylvania Housing Finance Agency

15 Syndicator/Limited Partner Perspective

16 Enterprise Community Partners ASSET MANAGEMENT Title Date Danny Green, Asset Manager

17 Enterprise Overview LIHTC Asset Management 1,500 projects and nearly 105,000 units 72 staff members Asset manager portfolios average stabilized projects Enterprise Services LIHTC Syndication New Markets Tax Credit Bridge Loans Capacity Building Advocacy 2

18 Evaluating Risk Key Risk Considerations General Partner / Sponsor Property Management Physical Compliance Market Financial Process Front-end Involvement Ongoing Monitoring Problem Solving 3

19 Asset Management s Mission Goals Risk management Quality housing for the residents Delivery of benefits to investors Long-term viability Challenges Upper tier vs lower tier GP communication Year 15 dispositions 4

20 Best Practices Key Strategies Dedicated asset management function Front-end participation Technology investment Realistic expectations 5

21 Management Agent & GP Perspective

22 Asset Management 2017

23 Establishing Asset Mgmt. Program Asset Manager: In house candidate? Financial, Facilities, Property Management background? Training: NeighborWorks Asset Manager Certification Program. On-the-job training. Asset Management Plan: Written plan, multi-discipline input and Senior Staff guidance. Define Role of Asset Management at HDCMidAtlantic: The role of asset management is to ensure that established standards and expectations regarding property financial and physical condition, regulatory and statutory compliance, and reporting requirements are being met. Compile Information/Portfolio Metrics: Portfolio data, ie. cost of operations/unit; cost of electricity/unit; cash flow/unit etc.....

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25 Something we can learn?

26 RED FLAGGED PROPERTIES For Period of: Jan September 2017 Rank Property Metric Amount Portfolio Median Variance (per unit) (per unit) (per unit) % SAM 1 Property Cost of Operations 8, , % XXX Cost of Electricity % SAM Cost of Water % Cost of Gas % Cost of Sewer % Operating and Maint. Expenses 1, % 2 XXX NOI (700.61) % XXX Cost of Operations 7, , % Operating and Maint. Expenses 2, % Cash Flow (2,597.58) % Economic Occupancy 92.27% 98.52% 6.34% 3 XXX Gross Potential Rent 4, , % XXX Net Rental Income 4, , % Total Revenue 4, , % Admin. Expenses 1, % 4 XXX Receivables 7, , % XXX Gross Potential Rent 4, , % Net Rental Income 4, , % Total Revenue 5, , % 5 XXX Receivables 9, , % XXX Cost of Electricity % Economic Occupancy 93.88% 98.52% 4.71% 6 XXX NOI (294.24) % XXX Cash Flow (806.17) % Economic Occupancy 95.28% 98.52% 3.29% 7 XXX Cost of Operations 7, , % XXX Cost of Electricity % Admin. Expenses 1, % 8 XXX NOI (34.60) % #N/A Cash Flow (951.77) % 9 XXX Cost of Sewer % XXX Admin. Expenses 1, % 10 XXX Cost of Gas % XXX Economic Occupancy 90.79% 98.52% 7.85%

27 RED FLAGGED PROPERTIES Sample Updated info as of: October 30, 2017 Current Rank Prior Rank Property Justification Person Assigned Action 1 3 Property Name ex. high cost of electricity assign to team member specific actions listed physical property needs 2 3

28 Industry Resources: AHIC Affordable Housing Investors Council NDC National Development Council IREM Institute of Real Estate Management