Community Preservation Partners’ Anand Kannan shares his views on Low Income Tax Credit investing and more
Low Income Housing Tax Credit specialists WNC & Associates may have more than 40 years of experience in the affordable housing industry, but the firm isn’t afraid to put youth in the driver’s seat of its rapidly expanding subsidiary, Community Preservation Partners LLC (CPP).
Newly appointed President of CPP, Anand Kannan, is 34, and readily admits that his youth has been one of the challenges to his success. “When I first meet somebody,” Kannan tells MHN, “I have to earn their respect. They might look at me and say: ‘Is this just some young punk telling me what to do?’ But once they work with me through a transaction they say ‘OK, this guy knows what he’s talking about, and we’ll give him the respect he deserves.’”
Kannan’s energy and willingness to earn respect have proved beneficial for CPP already. The company has been rapidly expanding its development portfolio, which now totals 55 properties in four states and more than 3,000 units. All are typically in need of some major TLC when CPP enters the picture as an owner or partner.
But Kannan says it’s the appreciation of residents who are enjoying their newly rehabilitated homes that motivates him more than balance sheets or deal volume.
“Every time I go back and visit one of the communities, a resident always tells me that they’re very appreciative and ‘thank you for everything that you have done.’ That just inspires me to keep doing this and motivates me to keep going forward.” Continue reading for MHN Contributing Editor Leah Etling’s recent interview with Kannan.
What do you think Low Income Housing Tax Credit investors need to be aware of right now?
I think people need to be concerned about interest rates. They’ve been so low for so long, and a problem that a lot of developers have is they assume things are going to stay the same forever. If you go back a few years, people were really happy with a sub-7 percent rate. Go back further and if you were below double digits you were really excited. Now if I’m above 5 percent, I’m disappointed. I think you’ve only got to recalibrate your expectations. Especially with how the Fed is looking to taper the bond buying program and end Quantitative Easing, that’s something that everybody has to look out for and the impact that has on future interest rates.
Can you summarize your recent growth trajectory?
Over the last three years, we’ve gone from about 1,000 units in our portfolio, which was done within the first six years of the company’s existence, to today having 3,000 units. We’ve got over 55 properties, which represents over $325 million in development costs. We’ve grown dramatically over the last couple of years and are pretty excited about our prospects going forward.
What differentiates CPP within the affordable housing industry?
The one thing that makes us different from the others is that we don’t go at it alone. We really believe in the concept of partnership. We’re not always going to be a buyer in a transaction, and can play numerous roles. We’re going to work with our preferred partners to leverage that experience, whether they’re experienced developers or new non-profits.
Typically, a developer is trying to get every dollar they can. Even though we’re a for-profit developer, we’re a mission-based organization that has fundamental values that we strive to achieve on each deal. One of the core values is teamwork and having a preferred partner or somebody working with us on the transaction fulfills that value, fulfills our mission, and provides affordable housing.
What’s one example of such a partnership?
We partner a lot with a local nonprofit called Jamboree Housing. They’re a big nonprofit in Orange County, Calif. Both of us can be doing our own deals, but together we’ve been able to succeed and recapitalize a lot of deals.
There was a deal in San Dimas, that we just acquired and finished the rehab at the end of last year, that Jamboree has partnered on with us. It was a Section 8 property that had an existing co-op with the owner, and wasn’t 100 percent subsidized. We have a lot of expertise on the HUD side and with Section 8 contracts, and were able to supply vouchers for the existing tenants to preserve their ability to stay at the property. Jamboree has the expertise to work with local officials and build community awareness. We played to our strengths, and now the project is a staple in the community. The residents are excited about the new units.
What does the year ahead hold?
We will continue to expand our focus on HUD and USDA preservation. That’s our motto, to provide unique solutions to problems that owners face. Whether it’s as purchaser, development partner, or consultant, our goal is to solve existing owners’ unique problems. We’ve got several properties in Los Angeles, a couple in Northern and Central California, and a few in rural areas in California that we have targeted in 2014 to recapitalize and rehabilitate.
How about for you personally?
With this new position, it’s time to deliver on the confidence and the trust that (CEO) Will (Cooper) and WNC has put in me to develop the group even further. Now the hard work really begins.
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