Portfolio strengthening indiana state housing conference 09 19 12
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Portfolio Strengthening Indiana State Housing Conference 09/19/12. Introductions. Larry Gautsche – President (July 2001) Alan Greaser – Director Asset & Property Management (April 2008), VP Real Estate (February 2012) Jim Davis – VP Finance (March 2007). Who Is LaCasa, Inc.?.

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Portfolio Strengthening Indiana State Housing Conference 09/19/12

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Portfolio strengthening indiana state housing conference 09 19 12

Portfolio Strengthening

Indiana State Housing Conference

09/19/12


Introductions

Introductions

  • Larry Gautsche – President (July 2001)

  • Alan Greaser – Director Asset & Property Management (April 2008), VP Real Estate (February 2012)

  • Jim Davis – VP Finance (March 2007)


Who is lacasa inc

Who Is LaCasa, Inc.?

  • Located in Elkhart County, Indiana

  • 41-year history, 31 staff

  • Primary lines of business:

    • Homeownership Center – IDA’s, pre/post purchase, foreclosure, HECM, lending, financial fitness training

    • Community Building & Organizing – neighborhood development, quality of life planning, leadership development

    • Resident Services – Immigration, VAWA, Deferred Action

    • Real Estate Development – Acq/Rehab, OOR, Permanent Supportive Housing, NSP, Tax Credit projects

    • Property & Asset Management – 267 units under management

    • Development – fundraising, volunteer management, brand management


Pre portfolio strengthening the properties as of 1 1 07

Pre-Portfolio Strengthening - The Properties as of 1/1/07


Scattered site family homes

Scattered Site Family Homes

  • 33 units of single family/duplex homes, owned 15+ years


Arbor ridge apartments

Arbor Ridge Apartments

  • 72 units of new construction on one site incl. one commercial space, 1999-2000


Pre portfolio strengthening the properties 2007 2008

Pre-Portfolio Strengthening - The Properties 2007-2008


The game changers

The Game Changers

  • Lincoln Ave. – critical rehabs to maintain two historic buildings and improve near-downtown neighborhood

  • Roosevelt Center, Water Tower Place, State & Main – rescue existing or in-flight projects from a failed CDC in the County’s major city

  • Build critical mass in second community


Lincoln ave redevelopment

Lincoln Ave. Redevelopment

  • 28 unit historic rehab of hotel and commercial building including one commercial space, May/December 2007


Roosevelt center

Roosevelt Center

  • Roosevelt Center – 35 units historic rehab of elementary school including commercial condo, December 2008


Water tower place apartments

Water Tower Place Apartments

  • 52 units of new construction senior housing in one building, May 2008


Elkhart properties

Elkhart Properties

  • Acquisition of 20 units in two buildings including one commercial space, December 2008


Before and after

Before And After

  • January 2007 – 105 units with one Tax Credit property and 33 scattered site units primarily in one community

  • January 2009 – 240 units with four Tax Credit properties, two multi-family properties and 33 scattered site units in two communities


Pre portfolio strengthening the environment

Pre-Portfolio Strengthening - The Environment


2009 market analysis occupancy

2009 Market Analysis - Occupancy


Lacasa inc occupancy graph

LaCasa, Inc. Occupancy Graph


2009 economic analysis

2009 Economic Analysis

  • Elkhart County has been one of the most recession-impacted counties in the U.S. The year-over-year increase in the County unemployment rate was among the three highest in the country. The absolute unemployment rate peaked at nearly 20% and remains at nearly 17%. In addition, the area has experienced a very high rate of foreclosure. This has created a combination of job losses as well as an increase in the availability of single-family homes for rent. A majority of the job losses were due to business closure, so recovery will be slow as is depends on the creation of new businesses, not just rehiring. Accordingly, the local recovery is expected to take several years as opposed to a more traditional 12-18 month recovery.


Organizational focus

Organizational Focus

  • Primarily focused on day-to-day operations

  • Struggling with recent portfolio growth

  • Did not have a strategic approach to Asset Management

  • Did not have good performance tracking tools

  • Could identify several problems but had no formal approach to prioritize and address them

  • Many staff involved in various elements but no real “team” approach


Portfolio strengthening clinic

Portfolio Strengthening Clinic


Portfolio strengthening clinic1

Portfolio Strengthening Clinic

  • Team approach – CEO, Director Asset/Property Management, CFO, Board member (ex-NEF employee)

  • Required a rigorous examination of each property and the portfolio as a whole (pre-work is critical)

  • Developed quadrant analysis of mission vs. profit by property – brutally honest assessments

  • Identified and prioritized improvement opportunities

  • Agreed on roles and responsibilities

  • Set timeline for action steps

  • Developed framework for NWA grant application


Portfolio quadrant analysis

Portfolio Quadrant Analysis


Targeted improvement goals

Targeted Improvement Goals

  • Arbor Ridge/ Roosevelt Center

    • Establish consistent property valuation methodology and permanently reduce tax burden

    • Reposition hard debt to sustainable levels at favorable long-term rates

    • Provide cost structure that can be supported by rent structure below LIHTC levels if needed to be competitive

    • Assure cash availability to fund mgt fees and other inter-company payables

    • Develop portfolio-wide approach to managing core operational costs: cleaning, maintenance, etc.

  • Organizational Impact

    • Complete banking strategy to partner with locally/regionally managed financial institutions

    • Improve consistency and total $ value of payments from properties

    • Assure asset and property mgt is a sustainable/profitable line of business

    • Develop a defined approach to portfolio management and screening of new opportunities


Portfolio strengthening the outcomes

Portfolio Strengthening - The Outcomes


Arbor ridge action steps

Arbor Ridge Action Steps

  • Declining occupancy – completed rent analysis, set “special rents” until achieve 95% occupancy, developed tenant incentives, created “Rent Assist” fund

  • High insurance costs – moved risk management program to legitimate commercial insurer

  • High property tax burden – appealed assessment methodology

  • High operating costs – identified “targeted” per unit operating cost and improvement opportunities

  • High debt burden – negotiated principal concession in exchange for complete refinancing, identified lower cost debt options, obtained grants for additional principal reduction


Arbor ridge results

Arbor Ridge Results


Roosevelt center action steps

Roosevelt Center Action Steps

  • Declining occupancy – completed rent analysis, “special rents” until achieve 95% occupancy

  • High property tax burden – appealed assessment methodology

  • High utility costs – replaced all common lighting with LED’s/occupancy sensors, installed limited solar array

  • High operating costs – identified “targeted” per unit operating cost and improvement opportunities

  • High debt burden – reduce principal and refinance at lower interest rate


Roosevelt center results

Roosevelt Center Results


Improved performance tracking

Improved Performance Tracking

  • Weekly

    • Cash flow

    • Occupancy rates

  • Monthly

    • Vacancy/concessions analysis

    • Operating cost per unit tracking

    • Net operating income

    • Debt coverage ratio

  • Quarterly

    • Collections/bad debt analysis

    • NeighborWorks Multi-Family Initiative reporting


Cash status by project

Cash Status By Project


Occupancy tracking

Occupancy Tracking


Operating costs per unit

Operating Costs Per Unit


Mfi performance tracking vacancy

MFI Performance Tracking - Vacancy


Improved organizational visibility

Improved Organizational Visibility

  • Board Asset Management Committee

    • Project oversight – from ideation to completion

    • Portfolio operating performance review

  • Board Finance Committee

    • More purposeful cash flow focus

    • Targeted financial performance metrics

    • Organizational debt management

  • Extensive graphing of performance metrics for staff, Management and the Board


Summary

Summary

  • The NWA Portfolio Strengthening Clinic was a very valuable process – a “watershed event” for LaCasa, Inc.

  • The subsequent funding NWA and others provided helped to take our targeted improvements from ideas to reality

  • The MFI process is a valuable discipline and continuous improvement tool


Questions

Questions??


Portfolio strengthening indiana state housing conference 09 19 12

202 N. Cottage Ave.

Goshen, IN 46528

www.lacasainc.net


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