The Michaels Organization remains the nation’s top affordable housing owner, with 47,005 units in 381 projects as of Jan. 1.
The vertically integrated company, based in Camden, New Jersey, primarily focuses on the development, construction, management, and investment of affordable housing nationwide, but it also works in military housing as well as the student and market-rate multifamily spaces.
This past year, Michaels has made several moves to grow and strengthen its business, including partnering with an architectural firm as an in-house architect as well as doubling the size of its asset management group.
One significant effort revolved around streamlining its management operations to find efficiencies. Michaels combined its three different operating companies focused on managing affordable, military, and student and market-rate housing under one property management banner.
“We’re in 37 different states and 440 communities. Oftentimes, we will have a market-rate deal a few blocks from a student deal and a few blocks from an affordable development,” says Milton Pratt Jr., executive vice president. “We weren’t taking advantage of the synergies.”
Another goal for Michaels will be to continue its expansion efforts across property types through its newly created acquisitions platform this year.
Its first transaction earlier this year included the acquisition of a 12-property residential portfolio in Indiana. With 831 affordable and workforce housing units and commercial spaces in the Fort Wayne and Indianapolis areas, the deal upped the company’s presence in the Midwest to more than 5,300 apartments.
Michaels also is planning for growth opportunities with new development. In 2021, the firm started 10 affordable housing developments with nearly 2,000 units, jumping from No. 18 to No. 4 on the AHF 50 developers list. This year, it expects to start 14 affordable housing developments with over 2,200 units.
On the affordable housing side, Michaels is planning for additional growth in Hawaii as well as key markets in Arizona and Texas. It also is ready to start predevelopment on a community south of San Juan, Puerto Rico. On the market-rate side, the firm is doing deals and planning to grow in the hot Sun Belt markets of Charlotte, North Carolina; Huntsville, Alabama; and Orlando, Florida.
“We are going to grow, but we are going to have responsible growth,” says Pratt. “That means we’re not going to overextend ourselves into markets or product types where don’t have the experience or can’t grow the talent.”
An example of a new development that fits right into Michaels’ wheelhouse is the Kenilworth Courts redevelopment in Washington, D.C., that has been a decade in the making after receiving a Department of Housing and Urban Development Choice Neighborhoods Planning Grant.
Michaels and its partners at the District of Columbia Housing Authority and The Warrenton Group broke ground on the $83 million first phase in March, which will include a multi-family elevator building for seniors as well as stacked flats and townhouse rentals in the Kenilworth-Parkside neighborhood of Ward 7. Of the 166 units, 118 will be deeply subsidized replacement public housing units and 48 will be affordable at 50% of the area median income for a family of four.
“It’s the first phase of a development that is meeting mayor Muriel Bowser’s vision for creating and preserving affordable housing,” Pratt says.
Another significant development that brings together Michaels’ affordable and market-rate focuses is 111 Willoughby Street, a mixed-use high-rise in the heart of downtown Brooklyn, New York.
Michaels, with joint-venture partners Triangle Equities and Geolo Capital, closed on the financing for the $123 million development this spring.
The transit-oriented development will incorporate both community and commercial space. Three floors will house the Newman Parish Center, a ministry center serving the 150-year-old St. Boniface parish. The sixth through 40th floors of the 40-story tower will feature 227 apartments, including 30% that will be affordable.
While Michaels has had a major presence in New York for decades, this will be its first market-rate development in Brooklyn. Delivery of the high-rise is expected in 2025.
As Michaels continues to grow, Pratt reminds that people remain the company’s priority. “We are living and breathing our core values of lifting lives. Homes are where it starts for families,” he says. “Taking care of our residents comes first, and real estate comes second.”