2023 Spring Issue - 29

As we're thinking about how
we can bring in new sources, new
players, new individuals, what's
really important-and this is what
we try to do at JPMorgan Chase-is
actually be able to help these other
institutions, these other partners,
to be able to recognize that they
don't have to create the whole
new thing themselves, that there
are tried and tested partners. And
the beauty of it is that they can be
more market responsive, and they
can also be faster than trying to
rely on enabling legislation.
Hill: TJ, I know in your business
model, you work a lot
with local partners. What are
some of the innovations that
you've seen around finance in
your practice?
McElroy: In the various states
where we're most active, the public
side-the state and local governments-are
looking at affordable
housing as infrastructure. And
they understand it's needed. They
want us there because at the
ground level they see the issues
and they see what's coming with
all the population growth. In those
markets-Florida, Georgia, Texas,
Arizona-there are incentives for
us to partner with local nonprofits
to gain real estate tax abatements
or other incentives to help with the
financial feasibility and promote
development.
Dominium is also working to
find ways to use our scale and
our financial strength to help with
the financial feasibility-to bring
in new investors and innovate
by financing things, not just one
off, project by project, but to say,
we have 25 developments in the
pipeline around the country, that's
around 5,000 units, or $1.5 billion
in construction financing and close
to $800 million in LIHTC equity that
we're trying to place annually. Can
we bring in larger institutions that
would benefit from that scale and
the efficiency of working with a
vertically integrated developer like
Dominium?
This year, we partnered with
Blackstone on their first tax credit
investment on a development
project that we have in Phoenix.
Blackstone has been amazing to
work with. They're very quick learners
and they're very smart. But I
think their heart is also in the right
place. They're really looking at this
in that same way that Dominium
does-that this is a supply problem,
and how to provide solutions
to increase the supply of new
housing and preserve the existing
affordable housing stock. I think
they're doing the latter with their
acquisition of the AIG portfolio, and
then the former partnering with
us as a new large institutional tax
credit investor to create new affordable
housing.
We're doing the same thing with
the banks like Deutsche Bank and
others on the debt side. As rates
went up last fall, we were able
to shift gears and create a new
private placement loan product
that takes nine or 10 developments
from our pipeline and pools
them together. They'll all be built,
and as they stabilize will be put
into a securitization. We're able
to lower our financing cost by 50
basis points or more on the debt
side just by doing things at scale
and using the financial strength of
Dominium to back up our loans.
Lynch: To get housing supply,
we need to be able to get effectively
either new zoning or access
to new land.
One of the things that's really
important is aligning with institutions
that have historically
not been part of the ecosystem.
JPMorgan Chase banks with a large
number of health care and highereducation
institutions, so we've
been having conversations with
these institutions that do often
control large amounts of land [to
consider using some of it for new
housing]. They haven't historically
thought of reserving [the land they
own] for expanding their health
care mission in that context. To the
extent that now they view housing
as a critical need and component
for operating and fulfilling their
mission, it's now possible to get
effectively new land by being able
to connect [housing more directly]
with their mission.
For example, we have conversations
now with health care systems,
and the folks in the room
are the chief operating officer, the
chief human resources officer, and
also the chief finance officer and/
or their real estate portfolio. Historically,
you would have never had
that group of people in a room to
even talk about how we can create
and better provide housing to a
community. Now that we have
that group, it doesn't mean that
the financing mechanisms need to
be more " complex " or create new
tools. It's finding a way to make
connections between the underlying
mission of an entity and then
how they can leverage resources
that they may have not historically
thought of as being accretive to the
housing ecosystem.
Kwatinetz: These hospitals are
an excellent example of a growing
strategy we are seeing in markets
as the scale of the crisis is recognized.
Developers and cities are
able to produce more affordable
housing by unlocking underbuilt or
" soft " sites, like these hospitals. In
New York City, we have soft sites
at schools, hospitals, and even
homeless shelters: places that one
wouldn't have considered before
as being sources of land have
suddenly become economically
relevant. In that vein, office conversions
[are getting] much more
support from local government
than ever before. The trend I have
been watching closely is corporate
campuses for relocation and
" All the individuals who are
here on this roundtable-
through our collective
thought leadership, as well
as our own balance sheets
and our ability to bring in our
networks and partnerships-
we actually can make an
incredibly meaningful
impact. There is absolutely
optimism. "
-LIONEL LYNCH, DIRECTOR,
JPMORGAN CHASE
SPRING 2023
URBAN LAND
29
2023 Spring Issue

Table of Contents for the Digital Edition of 2023 Spring Issue
