By Keat Foong, Executive Editor
The New Jersey housing tax credit developer Community Investment Strategies Inc. (CIS) has always seen itself more as a builder of communities rather than merely a developer of discrete properties, says Christiana Foglio, founder and CEO. The company is now taking the next step: utilizing the community building and other skills it has developed in the LIHTC arena and applying them to other areas of real estate.
Foglio sees a connection between developing tax credit housing and turning around rental properties. “We think we are uniquely positioned because of our strong management skills in stabilizing properties, increasing rents and making neighborhoods safe,” says Foglio. “Tax credit development skills are easily transferable to market-rate development.”
In December, the New Jersey-based CIS created Value Plus Strategies LLC, a company that will target mostly market-rate value-add opportunities. The company will seek to acquire and reposition distressed properties in the Class C-plus to Class B categories that may be undercapitalized or bank foreclosed, or that have simply not kept up with competitors. Seeking IRRs of 10 to 12 percent, the company will invest in multifamily assets of 50 to 80 units—too small for hedge funds, but too large for smaller investors, says Foglio.
“This is the perfect complement to our sister companies, which stand as separate legal entities driven by a common mission and shared ownership,” she says. CIS currently has independent contractor and property management arms.
In the 19 years since the founding of CIS, Foglio has built her company into one that has a philosophy that Foglio thinks puts the company into a class of its own. “We are very good at balancing true real estate development and paying attention to softer issues that make the community work,” says Foglio.
For example, CIS is thoroughly engaged in managing its residents. “We do not place a resident into a unit and say we have done our job.” From its years of experience developing tax credit housing, CIS also understands the process of working with politicians and the police force, and in putting “faces and people out there that you can feel and touch,” says Foglio. CIS management is also “open and upfront” in addressing issues with the residents, says Foglio. “We do not promise things we cannot deliver.”
When applied to the development of market-rate value-add opportunities, a stabilized tenant profile can make the difference between whether the property turns around quickly, or takes years to do so, says Foglio.
Based in Lawrenceville, N.J., CIS develops about two to three projects totaling 300 units of affordable housing a year, says Foglio. It has developed and owns and manages about 3,000 seniors and affordable housing units. Most of CIS’s holdings are in New Jersey, although it is also looking at the Connecticut and Maryland markets. Recently, Value Plus Strategies went into contract for the acquisition of a 184-unit property that has fallen into disrepair, says Foglio.
One of the benefits of paying attention to “the softer issues,” says Foglio, is that when the police chief announces that calls to the police department from the community has dropped by 62 percent after the property repositioning, “you cannot pay for that kind of reputation.”