We recently had a chat with former Stroock lawyer Carl Wise, now Managing Director, Investor Relations, at Hunt Capital Partners. Carl told us about his time at Stroock, his many years of experience working in the affordable housing space and the critical need for affordable housing in New York and beyond.
Q: Tell me about your time at Stroock. What did you like most about working at the firm?
CW: I really appreciated the mentoring I received from partners and senior associates. I learned a lot from Carl Kantor and Julie Sherman in terms of the way you approach a client, the way you approach a deal and the way you work through a deal. Also, I am admittedly a “deal junkie,” so working on complex real estate transactions was something I really enjoyed.
Q: What did you learn from law firm practice that prepared you well for working in-house?
CW: Actually, there were many things. Communication skills and the nuts and bolts of real estate transactions were probably the most important.
Q: Tell me about your work at Chrysler.
CW: I went from Stroock to Chrysler Capital, which was the investment company for Chrysler Corporation and modeled on GE Capital. I joined Chrysler Capital’s real estate group and within 12 to 18 months, they asked me to run the group. So I went over to the business side. Then for the next nine years, I did both legal and business work. My title was counsel and also president of the subsidiary running the real estate group.
Q: That’s a quick accession! How did it come about?
CW: When I joined Chrysler, it was at a time when the company was having issues and its debt rating dropped. The person running the real estate group was unable to make any more loans so he was limited to managing the portfolio and doing workouts on the nonperforming deals. As a consequence, he left the company and we were left with a portfolio of real estate loans — some of which were performing and some of which were in workout mode.
I was asked to run the real estate group and to liquidate the portfolio. I had done a lot of loan restructurings and bankruptcies while at Stroock, and at Emmet, Marvin & Martin, the law firm before that. I‘ve been on the business side ever since. Chrysler Capital ramped up again in the late 1980s, primarily making tax-advantaged investments.
Q: What can you tell me about Hunt Capital Partners LLC and your role there?
CW: Hunt Capital Partners has been in existence for about 12 years. We’re very specialized. We put together low-income housing tax credit partnerships. Over the 12 years, we’ve raised over $2.4 billion. We have people in various locations throughout the U.S. who source tax credit investments. We bid on those properties and then we put together investment funds for banks and other institutional investors.
In terms of my job, I’m really at the apex of our underwriting, origination and tax groups. I raise institutional equity and help structure the investments. Our investors and their counsel go through the projects we’ve underwritten and our tax credit fund agreements. I work with their comments and help close the investors into our investment funds. While I use my legal training almost every day in my role as a managing director, my responsibilities are on the business side. I work with a wide variety of interested parties – our investor partners, their counsel, our development partners and counsel, various state housing agencies and our underwriting and project management executives.
Q: What do you like most about your job?
CW: I really like helping to structure real estate investments and working across the various disciplines – tax, partnership, accounting and governmental. As I said earlier, I’m a deal junkie.
Q: What is the most challenging aspect of your job?
CW: Right now, during COVID, adjusting to not meeting with our investor partners face-to-face has been challenging. While video conferencing over Zoom, Teams and WebEx has been essential for the past 12–14 months, I miss the interpersonal interaction.
Q: Any surprises during COVID-19?
CW: I have to say that I was pleasantly surprised at how efficient both our company and our investor partners were. Our institutional investors had to switch to working remotely. They had to put together their committees to work remotely and figure out how to efficiently circulate investment and loan proposals through their committees and get approvals. But it was almost as if neither Hunt Capital nor our investor partners missed a beat. In fact, last year was one of our best years. We actually did more volume and raised more investor equity than we did in any previous year. I think we brought in five new investors in 2020. It took a month or two to create the efficiencies, but the transition was almost seamless.
Q: What do you like most about your work?
CW: I really like the variety and interplay. I like having to figure out a solution to a problem. I like to find solutions to issues.
Q: It seems that your job requires working with a wide variety of advisors and interested parties. How do you manage their interplay and ensure productive and cooperative engagements?
CW: It’s kind of like golf. You have to play the ball where it lies. We have investors that have certain hot buttons. You have to figure out what they are and how to deal with them. You really have to handle things on a case-by-case basis.
Q: What got you involved in the affordable housing tax credit arena?
CW: When I started at Chrysler, the company had gone through what I’ll call one of its near-death experiences. Then, in the late 1980s, Chrysler dominated the market on jeeps and minivans. As a result, Chrysler’s annual tax bill at that point was $1.5 billion. The person who ran Chrysler’s tax group at the time, John Loffredo, asked me if there was anything we could do to reduce our effective tax rate. I told him that I heard about this low-income housing tax credit that was part of the omnibus tax reform bill of 1986. I looked into it, wrote a white paper about it, and we started investing. Chrysler became one of the biggest investors in the affordable housing arena.
Q: I read that you were a founding member of the Affordable Housing Investors Council. Tell me about the counsel and your work with it.
CW: To be clear, I was only one of a number of early investors in the affordable housing tax credit arena that worked to form the Investors Counsel. The real driving force was Susan Wallace of USAA. Without Ms. Wallace, I don’t think there would have been an Investor Counsel. The Investor Counsel is a 501(c)(3) organization that was formed to educate institutional investors about the tax credit and to standardize investment criteria, underwriting standards and investment modeling.
Because it was just a fledgling investment at that point and there was no standardization, companies that were doing what Hunt Capital is doing right now were modeling their deals differently and underwrote deals differently. There was no standardization so investors never knew from one to the other what they were going to get. We felt that IRR computation and underwriting should be standardized. We got together those investors with big market shares at the time to talk about what we could do to standardize the investments and how we would deal with new investors so that everyone would be on the same page. That group, the Affordable Housing Investors Council is still there and meaningful, still creating and updating underwriting guidelines.
Q: We are seeing so many NYC projects with an affordable housing or a public use component. What do you see happening in the affordable housing market now and in the coming years?
CW: There is currently a critical need for affordable housing in every state and U.S. territory. This need is not currently coming close to being met. There are more than 20 million renters in the U.S. that are paying more than half their income on rent and there is an impending wave of evictions on the horizon. The need for good quality, safe affordable housing will only grow. We are always looking for investments in affordable housing developments particularly in New York City and surrounding communities.
Q: What can outside counsel do to make the job of in-house counsel and other corporate leaders easier?
CW: Working with outside counsel is a two-way street. In-house counsel and business executives have to work to keep outside counsel informed and give guidance through the deal process and outside counsel have to have an understanding of the approach the client takes to legal and business issues.
Q: What advice would you give newer lawyers regarding forging a career path?
CW: I think the answer is no different for lawyers finding a career path than for new entries to the job market in general. Find something you enjoy doing and find rewarding. Then pursue it. Admittedly, that is not always an easy thing to do.