Breaking Ground
Vincent R. Bennett, President and CEO, McCormack Baron Salazar, Inc.
By Darryl Hicks
10 min read
A Conversation With One of the Nation’s Leading Asset Managers
Asset managing can be challenging in the best of times but add a global pandemic to the equation and companies have had to reevaluate best practices to ensure peak property performance.
To learn more about how asset managers have performed, I contacted Vincent Bennett, president and CEO of St. Louis-based McCormack Baron Salazar. Since its founding almost 50 years ago, MBS has grown into one of the nation’s leading for-profit developers, property managers and asset managers of affordable multifamily housing.
In 2016, Bennett took over as president and CEO and has continued growing the company while overseeing all aspects of operations and managing a talented multi-disciplinary team of design, construction, legal, finance and project management staff across the country.
Bennett’s background lies in the development of public housing transformations (through Choice Neighborhoods, HOPE VI and other public housing programs) and large-scale neighborhood master redevelopment efforts, but this interview focuses on his asset management expertise and what he’s doing to ensure MBS’ success.
Tax Credit Advisor: How large a portfolio is MBS currently asset managing?
Vincent Bennett: We asset manage 219 properties, totaling 27,300 units, in a geographic area encompassing 30 states and two territories, Puerto Rico and U.S. Virgin Islands.
TCA: What are the most important data points for evaluating property performance?
VB: There are several key performance indicators that we use to evaluate property performance. There’s operational, financial and asset preservation. Operationally, it’s usually occupancy by program type, annual recertification, compliance matters, open work orders. We examine staffing trends, challenges, retention and turnover rates by region. In Southwest Texas, for example, the oil and gas and construction industries have snapped up some of our core maintenance and general labor talent. Other key financial performance indicators include economic occupancy, accounts receivable and net operating income, debt service coverage ratios and cash flow. From an asset preservation perspective, we typically focus on physical and five-year capital needs, reserves sufficiency, and replacement tax and insurance to name a few.
TCA: What data is often overlooked that should be scrutinized more closely?
VB: We’ve spent more time looking at staffing challenges. The highest priority for asset management is ensuring that there’s strong talent in place across all of the sites and regions. Our asset managers have been rethinking beyond just data sets and analytics and ensuring we have good talent at our sites and quality managers, assistant managers and site staff. That really goes towards a good strong performance. So, I would say that those areas around staffing, especially retention and turnover, is something that has historically been overlooked and that’s why we’re spending more attention on that.
TCA: What distinguishes a good asset manager from a bad one?
VB: A good asset manager knows how to avoid micromanaging a property, both in the management company and the property itself, while attending to the fiduciary duty of the ownership structure. There’s a tendency to get into the details of the operation and identify variables versus really thinking about the short- and long-term implications of decisions from an owners’ perspective. Striking a balance can be difficult at times, but it’s critical to the long-term success of the assets and particularly the families that live in the communities that you’re able to focus not only on the short-term, which the sites are doing on a regular, daily basis, but also having a long-term view of the asset and really thinking about a strategy to preserve it for its life cycle.
TCA: What best practices have you learned over the years that you can share with our readers?
VB: Beyond talent onboarding, recruitment and retention, information consumption and business analytics, it’s really thinking about how information is processed and organized. Historically, we invested in making sure that email worked, that there were good reporting systems, information technology, hardware and software, those kinds of things from a business continuity perspective. We looked beyond just development and property management to think about the company from an information technology and software perspective. Every keystroke is data. Every calendar item is data. How we manage that data and utilize that data is something that the pandemic has forced companies to rethink. The best practices we have embraced focus on information consumption and modernizing the ways that information is stored, processed, accessed and presented, not only to asset managers, but property management staff. Information has become a driver of the business.
TCA: Has the past year forced you to rethink some of your asset management best practices?
VB: The pandemic has caused us to think about service delivery in different ways. It’s about following CDC guidelines and local best practices that govern resident interaction, but also monitoring how amenities are utilized, how individuals make appointments, how information is communicated within different departments inside the company and at the property sites and all that getting rolled up and processed in a way that helps queue work orders, inspections and deployment of resources. The pandemic has in many ways accelerated the way we collaborate around technology. This time last year, we communicated through Skype and found it to be clunky and not very supportive of the work that needed to happen. We migrated to Microsoft Teams. I recall our IT team saying it could take six months to fully roll out. I said we don’t have six months. I know we can’t do it in six hours, but let’s choose six days to six weeks. We got everybody throughout the company, including asset management and site teams, reorganized in six weeks. That effort allowed us to break down silos that had evolved over decades of working in the industry. It allowed for more real-time inputs and decision-making.
TCA: What common challenges do you encounter asset managing affordable housing assets? How do you overcome these challenges?
VB: For us, it’s managing the mission to margin, or what’s often referred to as the triple bottom line. It requires an alignment of vision through clear communication and collaboration between the development company, property management company and asset manager to preserve and protect the asset. We try to focus on immediate short-term requirements, such as meeting the requirements of the tax credit investor or a local agency that has soft funding requirements and then balancing out longer-term goals of lifecycle or asset preservation. It’s trying to balance the bottom line with social and community priorities.
TCA: The Centers for Disease Control and Prevention (CDC) rent eviction moratorium ends on June 30. Are you taking any precautionary measures to maintain peak portfolio performance, or have your tenants largely recovered?
VB: We remain committed to sourcing services and relief funds for families in our communities and maintaining housing stability for those impacted by COVID. At MBS, we understand that much of what’s needed by the families requires a significant wraparound of services to handle the trauma of COVID. We entered into a national contract with a human services partner, Urban Strategies, to provide guidance in service delivery options. We found during the pandemic that families needed some level of service, whether it was transitioning from employment to unemployment, childcare needs, adult care needs and access to schooling through the Internet. Families, even if they had access to 5G, needed support to understand how to work with the equipment that they were provided with.
TCA: What other important trends are you seeing in the marketplace?
VB: One significant trend is the need to close the digital divide. Having a digital infrastructure in place is key and funding sources that offer bulk Internet, improved Internet access and educational programs. The Internet has become an essential utility for many families to thrive in a new economy driven principally by the pandemic. Quantifying the economic benefits derived from resident service coordination is another emerging priority. Communicating to policymakers the importance of resident services and proposing greater investments in this area is something that property owners are talking about. Using data that’s available to us, and within the industry, to determine how onsite supportive services translate into lower operating costs, higher occupancy and fewer delinquent rent payments will be critical to making the argument for additional investments. A third trend is the significant insurance spikes that we’re seeing. There are issues that we must deal with in the communities we serve, but this is having a significant impact on operational costs due to the higher insurance premiums. We’re hopeful that the industry can put this on policymakers’ radar in helping maintain the affordable housing stock for the next chapter.
TCA: One year ago, you formed a Diversity, Equity & Inclusion Committee. What precipitated this effort and what outcomes can you share?
VB: As a company that was founded to reverse the negative effects of systemic racism and disinvestment in communities of color, we’ve always had a strong focus on diversity, equity and inclusion. This is reflected through a diverse workforce within our organization. We’ve always had strong Minority/Women Business Enterprise (M/WBE) participation goals on our construction sites. We look to not only meet these goals, but to further them. What changed was precipitated not only by the Black Lives Matter Movement, but a recognition that we needed to articulate and formalize policies, procedures and training across the organization. The first step was to establish a committee that identified immediate, but also longer, more strategic issues. Through this effort, we developed a seven-month, 14-session capacity training program that gives our employees context language and tools to begin to really understand and address the issues that we see across the country, within our communities and within the company. It’s a fairly challenging program that has led to some tough discussions. We’re already seeing results in the way our employees engage with each other and understand and embrace diversity.
TCA: Is there more that the affordable housing industry can be doing to promote DEI practices?
VB: DEI goes beyond inclusionary hiring practices and M/WBE contracting goals. The affordable housing industry is often in the middle of communities that have been impacted by systemic racism and a lack of job opportunities, healthcare, education, childcare and housing choices. Many of the employees who work for us are from these very same communities and confront at least one or all of these challenges throughout their daily work. The industry should offer, in our opinion, more capacity, training and access to programs for employee and stakeholder training and educate politicians and others on the importance of using high-quality, inclusive, mixed-income housing as a base for rebuilding disinvested communities. If we can create an ecosystem that helps support companies that want to tackle these very difficult issues directly in a constructive way, I think we all benefit.
