Wood Partners is gaining momentum as it heads into 2012 and beyond.  After fighting through the “Great Recession” the past three years, our company, industry and economy all are beginning to see the light at the end of the tunnel  - and it does not appear to be a train.  We have learned many things from the most recent economic meltdown and we are prepared for what this new cycle has in store, even if it is a train somewhere down the tracks.

Last year was a tale of two halves.  The first half of the year saw an improving economy and renewed optimism for the future.  Wood Partners was actively building its pipeline and having little difficulty raising capital for its targeted investments.  Then, all of a sudden, the European debt crisis fell upon the economy like a wet wool blanket.  Interestingly, the crisis that sucked the optimism out of the financial world presented Wood Partners with new opportunities.  Across the country we were able to pick up development and acquisition opportunities that could not be financed by our competitors.  As a result, our pipeline grew and we more than doubled our unit starts from 2010.  Although our capital partners became more cautious in the second half of 2011, they continued to commit to our new investment opportunities.  Being one of the handful of national multifamily developers that survived the crash of the housing market propelled us to the head of the pack in 2011.

The fundamentals for the multifamily industry are the best I have seen in my career.  From 1999 through 2008, annual multifamily housing starts were above 300,000 units nationwide.  For the past three years, that total fell by two-thirds to approximately 100,000 annual starts, approximately equal to the number of obsolescent units that are removed from the stock each year.  Based on the demographic impact of the echo boomers entering their prime rental years, it is believed that the industry should be producing more than 400,000 units per year to meet demand.  In addition, the home ownership rate in the United States has fallen from of a peak of 69 percent in 2004 to 66 percent last year and is likely to continue falling.   As a result of these favorable conditions, we have seen occupancies and rental rates rise dramatically across all of the major markets we cover.   Multifamily asset values have been rising as well with interest rates and capitalization (cap) rates at or near historic lows.

It is easy to be optimistic heading into 2012, but our enthusiasm is tempered by the challenges of the recent past.  Wood Partners expects to start more multifamily units this year – a total of 6,200 - than it has in any year since its founding in 1998.  We continue to be obsessively focused on managing risk in an inherently risky business.  Our deals are capitalized with significantly more equity, and less debt, than in years past.  We also will continue to grow our acquisition and property management business to diversify our revenue sources.  Wood Partners is selectively adding new personnel to support our activities and is proud to have the best multifamily team in the industry.  We are well prepared for what lies ahead, whatever it may be.

Sincerely,

Ryan Dearborn
Chief Executive Officer