J Darrin Gross
I'd like to ask you. Danielle Ash, what is the BIGGEST RISK?
Danielle Ash
Well, I'm going to give a self serving answer, and then I'm going to give more of an investor based type answer. So the self serving answer, I think, is, you know, people come to me from all different sectors of real estate and at all different parts of their career, from early stage developers, sponsors to, you know, super high net worth sovereign wealth funds, who've been investing for 50 plus years. And I do think one of the biggest mistakes or risks that people face is not having good counsel involved in their transactions, having transactional counsel who has the combination of wanting to explain the risk to you and able to do it in a way that you understand, and also not getting in the way of the transaction Just to look smart or kind of win the point. You know, there's a balance of trying to identify risk and be creative about how do we structure around that risk? How do we get you the protections you need? How do we think about all the different ways that bad things could happen and you need to address? And how do you help your investors? Protect your investors in the long run through those but at the same time, what good is it if you can't close the deal right and knowing the difference between what risk is worth cutting the deal over and what risk is something that you can find a mitigation for? So that's on the self serving side, because you know, all the time I see attorneys who aren't really doing that extra work, or where clients come to me and they they've done a deal, and they didn't see this issue before, and now they're facing it, and they need real explanation as to, like, why we have to think about it on the investor side, I will say that, you know, just thinking about policy for a second. Now, there's been a lot of change in policy at the federal level, at state levels, everywhere right now, it's a bit of a crazy time for trying to follow what's happening. And while there has been a lot of great gains for, you know, the Low Income Housing Tax Credit for changes in that policy, I do think that, and I'm borrowing this from one of my clients, Sharif Mitchell, at Northern Liberties, that the risk of a lot of those policies is actually on the populations being served by affordable housing. And we don't always think about those sort of tertiary elements. We don't always think about the fact that, you know, they still have to put food on the table, that they have to figure out how they're going to get you know their children to school, you know that they have to commute. All those costs come into play, and what we've seen over the last few years with a lot of affordable housing, especially coming out of covid, is you have a lot of high arrears issues coming up, because tenants have to choose, do I pay my rent, or do I feed my kids? And when you have policies that make those potential decisions harder, or where they're losing potential benefits, you know, in some states, it's very hard to get your tenants out for non payment, and so a lot of them are going to take the risk that, you know, maybe I'm just going to feed my kids instead. And so I do think that's something important to think about. That when you're putting together a capital stack, you're looking at the population, you're figuring out, how are you going to serve that population, how you're going to work with those people to ensure that they have the capacity, they have the other resources they need to stay in that housing is that really is going to impact the value of your asset in the long term as well?
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