By Lauren Johnson
When AREA Property Partners sold the Lafayette Boynton complex in the Bronx for $51.5 million last month, it was a textbook Jim Simmons play.
The veteran real estate executive has been at the helm of AREA’s North American Domestic Emerging Markets team for the past eight years and has been credited with directing a trend in institutional investment towards underserved and neglected urban areas.
He was recognized last year as an Outstanding Business Leader for defining an investment strategy of “rehabilitation, revitalization and repositioning” that has become a model for urban investment today that includes the likes of Magic Johnson’s Johnson Development Corporation, which directs its money towards inner city entertainment complexes, and Andrew Agassi Ventures, which partners with Canyon Capitol to build schools.
Lafayette Boynton itself was bought by a public-private group that included Global One Real Estate Fund and the New York Affordable Housing Preservation Fund, who paid for it with money administered by L + M Development Partners and Citibank.
Vikram Pandit, boss of Citibank — the third largest bank in the world — said when the fund was launched that it was his company’s contribution to fuelling the economic recovery and lending a hand to those in need. For Simmons it was the touchdown of the deal. “From the beginning of AREA’s ownership of Lafayette Boynton in 2006, we have focused on improving the property while maintaining affordability for tenants,” he said at the time.
“After executing our business plan, we selected Global One and its partners as purchasers because of their dedication to preserving affordability and our expectation that their planned capital investments will continue the work that we started and positively affect the surrounding neighborhood.”
In short, it’s a win-win for everyone. AREA’s investors make a profit, the neighborhood gets improved, the residents get better, more affordable homes, and the new buyer has a pipeline to a steady income stream. Simmons explained, “AREA’s strategy for US emerging markets involves several stages. We begin by identifying well-located, but often under-invested, residential properties in major US urban markets.
“Then, we partner with local constituencies such as elected officials, government agencies, and tenant associations to create win-win outcomes in terms of maintaining affordability and improving neighborhoods. AREA typically invests in building repairs and renovations as one component of those partnerships.
“And, finally, we seek exit strategies that consistently deliver the desired returns to our investors while ensuring that the properties remain affordable, high-quality housing.”
Simmons said the simplicity of the plan first struck him when he was working as the chief investment officer with the Upper Manhattan Empowerment Zone (UMEZ). It was one of nine such zones created by the Clinton Administration in 1994 to revitalize distressed communities by using public funds and tax incentives as catalysts for private investment.
Simmons’ job at UMEZ was to direct the investments of the organization and steer the re-development of Upper Manhattan.
“We accomplished a lot of things that really helped transform Upper Manhattan,” said Simmons, who noted that, during his tenure, the program brought the first new movie theater and retail mall to Harlem in more than 50 years.
“We created over 3,000 jobs and that really provided a foundation for the second renaissance of Harlem,” he said.
That experience launched his commitment to changing the lives of many through affordable housing. “It’s what exposed me to both real estate need and opportunity to invest to create and improve workforce housing stock,” he said.
“Urban crime has dropped in recent years, making cities much more livable and desirable. As a result, retiring baby boomers and their children have been returning to city centers. But with that growth in population has come an increase in the cost of living — a dramatic increase in many instances. This makes providing workforce housing alternatives that much more critical.
“To the extent we provide high-quality, affordable rental and home ownership opportunities in cities, we can offer a better quality of life to essential workers through reduced commuting times and other benefits.”
Simmons grew up in Somerset, New Jersey. He said he remembers his father leaving the house every morning for a daily three-hour commute to work. “It meant there were three hours that he wasn’t with his family,” said Simmons, noting that, back then, the urban blight had driven many families out of the cities and into the suburbs.
Today, he takes the subway from Harlem to AREA’s offices at 60 Columbus Circle and enjoys quality time every day with his two young children. “To the extent where I was able to craft an existence for my children that wasn’t the case for me, was very desirable,” he said.
As a student at Princeton studying electrical engineering and computer science, Simmons had seen his future in the engineering field, impacting the lives of working people in a very different way.
In 1988, he landed a job at General Electric as an Edison Engineer and rotated through several roles and various divisions of the company. “GE is a firm that provides great management training. I was pleased to have the opportunity to start my career there,” he said.
In 1992, Simmons went back to School at Virginia Tech to earn his Masters in engineering, but then was recruited as an analyst for the Bankers Trust.
He admitted, it wasn’t the career path he’d been following, but looking back, described it as the “launching pad” for what was next.
His interest piqued in the Wall Street world, he went back to school in 1994 and gained a Masters in Management from the Kellogg School of Management at Northwestern University, then went to work as a fixed income trader in Emerging Markets Derivatives at Salomon Smith Barney.
His work in that sector translated well to his role at UMEZ and, later at AREA, which he joined in 2003 when it was still Apollo Real Estate Advisors, a global investment firm that emerged as an international giant by investing in distressed property markets in the United State the early 1990s.
When he arrived, AREA had no Domestic Emerging Markets team. “They wanted to formulate a plan to create affordable housing,” Simmons said. “I implemented that plan.”
The company has since invested nearly $500 million around the country buying, improving and selling workforce housing.
Among its most recent New York investments have been Delano Village, a 1,800-unit rental complex in Harlem, and Fairfield Towers in East New York, a venture that Simmons called an “ideal candidate” for the AREA strategy. Located within a quarter mile of the new 640,000 s/f Gateway Center and across the street from a development of new homes, the property had all the ingredients for success.
“The goal of our project is to make Fairfield Towers a showplace for what public-private collaboration can achieve in revitalizing a community with affordable upgraded housing and amenities in a family-oriented environment,” he said when AREA purchased the 1,000 unsold condos in 2006.
Now known as Meadow Wood at the Gateway, the complex has undergone a $40 million renovation been fully converted to comfortable homes with sale prices starting in the upper $100,000s.
The architect of the AREA strategy of investing in the residential and affordable housing sector said he continues to see “significant opportunities” throughout the city, in Manhattan and the boroughs.
“While the scope of our domestic emerging market investing is national, and we are a global firm, we are New Yorkers and there’s no better place to invest than New York. We’ll continue to pursue attractive opportunities here as they present themselves,” he said.
By Lauren Johnson