Trends Watch: Real Estate Private Equity Investing

January 19, 2023

By Elana Margulies-Snyderman 

EisnerAmper’ s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Jason Bordainick, Managing Member & Co-Founder, Hudson Valley Property Group.

What is your outlook for real estate private equity investing?

As we look out into 2023, there are three key trends driving the market right now. There is increased competition, as more institutional capital flows into the space. As a result, we continue to see more ownership consolidation.

Where do you see the greatest opportunities and why?

There is a deepening affordable housing shortage across the U.S. that remains a crisis and will not reverse course as fast as it needs to properly accommodate the number of people in this country who rely on it. Many existing facilities have become worn down due to lack of maintenance and investment from their existing owners. As a result, we continue to see more state and local authorities looking to partner with organizations to not only preserve the existing supply of affordable housing but also upgrade older existing facilities with modern appliances, fixtures, and amenities to improve the standard of living for affordable housing residents.

No new Section 8 contracts will be issued as it is a legacy program so if these units are lost, they are permanently lost from the affordable housing supply.

What are the greatest challenges you face and why?

Rapid growth/accelerated acquisition pace

As mentioned, there has been an influx of new firms entering the space, which has increased competition for deals and the asset class’s pace of acquisitions.

Working with bureaucracy

All the properties we acquire and rehabilitate are transacted through financing from tax-exempt conduit bonds, low-income housing credits, and other strategies such as debt financing and bridge equity. They are also supported by long-term payment in lieu of tax (PILOT) agreements negotiated at the municipal level. This means the success of each property is highly dependent on HVPG’s successful partnerships and coordination with a variety of city, state, and federal organizations as well as banks and financial institutions.

What keeps you up at night?

Efficiently/successfully planning to scale the company

We are committed to scaling the company and being a mid-sized firm – that is, being able to provide the breadth of expertise and capabilities that you would find at large firms, while still providing the white glove, personalized service one would expect from smaller boutique firms. We always strive to provide the best of both and as we continue to acquire more properties and grow, we always think about how we can scale effectively. Ultimately, we don’t want to grow just for growth’s sake. We want to be intentional in how we expand.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.

About Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.