Developer profile: Laura Burns Focuses on GP Acquisitions to Thrive in Tough Times
By Caitlin Jones
4 min read
Tax Credit Advisor, January 2010: As CEO of The Eagle Point Companies, Laura Burns is one of four partners in an integrated network of four firms, all involved in affordable housing. The Portland, Me.-based company’s arms include firms engaged in development and property management, investment, and consulting. Respectively, these are Eagle Point Partners, LLC; Eagle Point Management, LLC; Eagle Point Ventures, LLC; and The Signal Group.
Focus on GP Interest Acquisitions
Despite the fact that Eagle Point’s development specialty has been preservation deals – acquiring and rehabilitating existing multifamily rental properties (generally HUD-assisted or regulated) using the low-income housing tax credit (LIHTC) and tax-exempt financing – the company is not developing any new projects. With the housing credit market under duress, Eagle Point is focusing instead on expanding its portfolio of properties and units under management by acquiring general partner interests in operating limited partnerships for existing LIHTC properties.
“Until we see a change in the tax credit equity market, we think [this] is a sounder business plan for us,” says Burns. “We think that there are many owners that are desirous of a liquidity event, and that gives us the best opportunities to continue to invest monies, grow our portfolio, and grow our management company.”
Since beginning this new business line in 2007, Eagle Point has purchased “GP” interests in nine properties with about 1,000 units, and soon expects to close on another six properties with 800 units. All are LIHTC projects.
Eagle Point’s current management portfolio contains about 3,200 LIHTC units, comprised of the GP acquisition units and some 2,100 units in preservation projects that the company developed during 2001-2006.
“We have a pretty solid concentration in the Midwest – in Missouri, Michigan, and Indiana,” says Burns. “And then we have another concentration on the East Coast – Washington, D.C., Alexandria, Virginia, Rochester, New York, and Southern New Jersey.”
The GP interest acquisitions to date have all been properties still in their 10-year tax credit period. “To some degree, the general partner is more motivated [to sell] because their liquidity event is so much farther away,” says Burns. This enables her company to pay a price that will support delivery of the projected returns to investors.
Eagle Point has funded its GP acquisitions thus far from an initial $10 million fund that has private individuals as investors, organized by Eagle Point Ventures in 2007. This fund is nearly depleted, and a significantly larger second fund is in the works and expected to be in place by early 2010.
Eagle Point identifies new GP acquisition opportunities from existing relationships, outreach, and through brokers.
The company’s first deal of this type, in December 2007, was an acquisition of the GP interest in Lafayette Apartments, a 340-unit apartment community in Alexandria, Va., outside Washington, D.C., which had been a 2003 tax credit acquisition/rehab deal. Burns said the property was “flailing” at the time, the result of inconsistent management, high vacancies, and operating deficits for the then-general partner. “The limited partner was quite pleased to see us enter the picture,” says Burns. “And within three months, with just very intensive management, we turned the property from one that was losing money, to one that was at stabilization, met all the required debt coverage ratios, and is [now] a very positive cash-flowing asset for us.”
Path to the Field
Burns ventured into affordable housing at the Boston Redevelopment Authority, where she worked from 1985 to 1992. “I spent a great deal of my time working on neighborhood development properties, and trying to facilitate tax credit deals for the city of Boston.”
In 1992, Burns moved to Maine to work for national tax credit developer, Gleichman & Company, leaving there in 1995 to form The Signal Group, whose clients today include property owners and managers and government agencies.
Burns and her partners began the development company in 2001, followed by the management company and the investment company, the entity that raises capital and buys GP interests, in 2007.
Eagle Point fortuitously entered the GP acquisition business just as the LIHTC market began crumbling. “When the equity market changed so dramatically in 2008, we only had one deal that was in the [development] pipeline that was relying on finding an equity investor,” she notes. Eagle Point’s most recently completed preservation transactions utilized both housing and historic tax credit equity, including award-winning Georgian Court in Kansas City, Mo. This was one of three HUD-assisted properties that Eagle Point acquired in 2006 and completed in 2008.
Future Development
Although not actively pursuing any new development projects currently, Burns said Eagle Point is “committed” to LIHTC development and expects to resume this activity in the future once the market recovers.
