Dave Woodward: Going Global
- Jan 26, 2016
Dave Woodward is a man looking for deals. Named a managing partner for Brookfield Property Partners last May, the former CompassRock president and Laramar Group CEO has been charged with building out a global multifamily platform for the Toronto, Canada-based asset management group. Founded in 1899, Brookfield boasts $225 billion of assets under management in real estate, renewable power, infrastructure and private equity. Despite only recently expanding into the multifamily space, the company has been an active buyer, and with 45,000 apartments is likely just a portfolio or two away from rivaling the largest multifamily operators in unit count.
Powering that growth is a global opportunity fund designed to acquire compelling, high-return platform real estate deals, exemplified by Brookfield’s August 2015 purchase and privatization of Associated Estates. “This is a huge equity fund, so buying one 250-unit deal in Atlanta really doesn’t move the needle,” said Woodward. “But you can’t just simply go buy something and get a really high return in apartments today. You need to move several dials in order to generate higher returns, and our purchase of Associated Estates is a good example of that.”
Specifically, Brookfield saw a value-add opportunity in significantly reducing the G&A expense at Associated, which Woodward says was significantly higher than comparative real estate investment trusts (REITs) at the time of purchase. Brookfield was also able to immediately fold operations under Fairfield Residential, the San Diego-based apartment owner and developer it acquired a 65 percent majority interest in five years ago, bringing that company out of bankruptcy.
“So on the G&A side we were able to fold operations up into the Fairfield platform without a lot of incremental costs, and while the deal opened up a few markets that Fairfield was not in, there was also a fair amount of overlap,” Woodward said. “That’s highly accretive. If you have eight or nine properties in a market and then you immediately get three or four more and you already have a regional manager on the ground, you can fold those right in.”
Boots on the ground visibility
Finding similar workable deals across multifamily is job number one as Woodward and his management team compete against other Brookfield asset groups for opportunity fund equity. “What’s unique about it from other funds is that it’s multi-sector and it’s global, so just about any type of property anywhere in the world could be a candidate,” Woodward said. “There’s no specific allocation, it’s driven by the best investments available, so if we find something really compelling we can get it done, and if the office guys find something they can get it done, and everyone competes against each other for those dollars.”
Separately, Fairfield Residential is also deploying a third value-add fund backed by institutional investors, based on the successful placement of recent $323 million and $805 million funds. Woodward says Fairfield’s investments allow for more strategic purchases of assets, along with approximately one-third of the fund earmarked for ground-up development opportunities. “Fairfield is a sharpshooter capable of doing the one-off deals and is also our boots on the ground,” Woodward said. “With almost 45,000 units under management there is coverage and visibility into virtually every market in the U.S. that will provide the opportunity for us to source deals both for Brookfield and Fairfield.”
Brookfield has also moved heavily into luxury core development, particularly in New York City, where it’s simultaneously developing Manhattan West, a 62-story, 800-unit high-rise just west of Penn Station along with 780 more units across two residential towers in Greenpoint, Brooklyn. “It’s all on balance sheet development with more patient capital, acceptable lower rates of return, and longer term holds,” Woodward said. “We have sites in other bigger markets around the U.S., some of which were former Brookfield office assets that can be repurposed or semi-repurposed for the addition of apartments. We control a lot of land, some of which will definitely become multifamily development land.”
Energy and the European apartment model
Finally, Woodward is looking for opportunities to expand Brookfield’s global apartment footprint, and is spending approximately 10 percent of his time advising the residential build-out of Brookfield investments at Canary Wharf in London and Potsdamer Platz in Berlin. “It’s a small piece of what I’m doing now but it’s really interesting because I had not yet done something internationally,” he said. “There are few countries that have a rental model that resembles the U.S., and there is a lot of talk about bringing that model to London and to Europe and what that’s going to look like for investors and operators alike.”
Woodward is also still an energy guy, and remains committed to the environmental and P&L upshot of increasing the energy efficiency of multifamily communities. “We still buy properties that have missing bulbs and don’t have low flow toilets and faucets—there’s still a lot of that out there,” he says, noting that Brookfield is embarking on a multi-million energy upgrade program on six buildings in New York City.
The emergence of the global real estate sustainability benchmark (GRESBE) as an alternative standard to LEED has Woodward intrigued as well, and could figure largely into the build-out of the Brookfield multifamily platform.
“In addition to hard metrics it measures your corporate culture and responsibility, and that’s something I’ve been immediate impressed with at Brookfield,” Woodward said. “The culture reminds me of my old Archstone days where people are so thrilled to be part of the company and part of the platform. Brookfield is a similarly amazing platform and amazing company, and they’re collaborative and team-oriented. I know it’s hard to quantify, but it is incredibly valuable when people simply give a damn that much.”