Execution Strategies

 

All acquisition opportunities will keep KDF’s core investment values in mind. This includes purchasing properties in primary and secondary markets with positive population and employment growth at a price well below replacement cost. The properties will be one of the “low-cost providers” in their immediate submarket. This strategy is designed to provide superior risk-adjusted returns over Class A and B market-rate properties and has been proven effective by KDF over a 20+ year holding period for their portfolio. This strategy provides significant low-risk returns over long holding periods, a good fit for certain types of long-term investors.

  • Market Rate 

    • Existing “workforce housing” market rate product with in-place rents at or below 80% of Area Median Income (AMI) rents. Option to create affordability on all units at 80% AMI in order to qualify for the low-income housing property tax exemption. There will be a sizeable yield advantage over competitors by leveraging KDF’s affordable experience and City relationships to extend affordability to the existing market-rate units without having to reduce in-place rents to gain the tax exemption. (See: Case Study #1 - Five Point Seniors) 

  • Affordable

    • Existing Low-Income Housing Tax Credit (LIHTC), Bond, or other income-restricted properties with a large ($200+) rent gap below market rate product. KDF’s long-term investment strategy will produce several options during the hold period as the affordability restrictions move closer to expiration:

    • Tax credit re-syndication execution (preservation play). Leveraging KDF’s extensive background in the financing and development of affordable housing.

    • Hold through restriction expiration and take advantage of the low basis in the property with rental upside as the property converts to market rate. (See: Case Study #2 – Quail Village and Case Study #3 – Wisteria Walk)

  • Value-Add 

    • Opportunities on a select basis. i.e. management upside, light interior renovations, pushing affordable units to max rents, utility savings initiatives. (See: Case Study #4 – Ventana)

INVESTMENT PARAMETERS

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