Kadish: We’d actually been working on the deal for about a year; it was probably the longest transaction we’ve ever worked on. We were selected some time in the middle to end of the summer to be the lead team competing for this acquisition, and we ended up the winners. Morrison Grove and we complement each other very well. It is a fund management business, they have managed lots of funds and money for Canadian pension funds and the like. Our business is much more of an asset management and property management business. So when you combine the two, you have an organization that really meets everything that Credit Suisse was looking for to serve both itself and the investors in its tax credit housing business, both on a fund management side and an asset management side.

GlobeSt.com: Aside from the real estate, what do you gain from the deal?

Kadish: We are in the business, and it becomes a 15-year contract from which we will earn fees through doing asset management. We will also have the ability at some point and with some properties to come in and become property managers, or substitute general partners, if need be. Our role is not to kick out anybody or remove property managers if they’re doing a good job. But if they slip for any reason, Credit Suisse hired us to basically make sure that professional management gets in charge and people with good real estate experience take over the general partner’s role.

GlobeSt.com: So Credit Suisse still has an interest in those properties? When does that terminate, if ever?

Kadish: Yes, we still are subject, for the time being, to the their approval process. We will eventually have ownership of the asset management business—a number of ownerships have consent rights, and that’s expected by year-end. But after that, we will still, on major decisions, seek out Credit Suisse’s approval because their guarantee on tax credit yields, for example, will remain in place. Of course, this is on a limited number of yields, probably close to 100, but it’s from Credit Suisse, and that will remain in place for literally the 15-year period. It’s a complicated transaction.

GlobeSt.com: What are the respective roles of Capreit and Morrison Grove?

Kadish: Morrison Grove is essentially the fund manager; they handle investor relations and do the fund accounting that’s required. They’re more, if you will, the back-room shop. We, at Capreit, are the front-room shop in dealing with the real estate issues.

GlobeSt.com: Why did this deal take so long? Was it mainly the RFP and approval process?

Kadish: That probably took a good six months, and the due diligence was very complete on Credit Suisse’s part, as it should have been. And then from September to October 2009, that’s when we started negotiating documents and did our own diligence. These are, after all, 240 properties are in 38 different Credit Suisse funds.

GlobeSt.com: The tax credit business has been having quite a tough time lately—are you concerned about that at all?

Kadish: The tax credit industry, in terms of new acquisitions, is having a very tough time to make things work. Obviously, a whole lot of the former buyers of tax credits are out of the business, including folks like Fannie and Freddie. But these are existing tax credit communities, so for the most part, the investors are in place, the dollar amounts are in pace, and it’s just to make sure that these communities are operating pursuant to all of the loan documents that they’ve entered into and make sure they’re compliant with tax credit regulations. So it’s a different set of issues compared to a tax credit community that’s started out and developing—what do they do, how do they get tax credits, etc. It’s a much “easier” task to handle the communities that already have tax credits and are operating.

GlobeSt.com: Are you seeing other opportunities out there similar to this one?

Kadish: We are. We’re seeing some of the major institutions who’ve done similar things to what Credit Suisse did. They’ve found themselves in a role of trying to be, if you will, everything to all investors: they want to be a guarantor of the yields, they want to be a property manager, they want to be an asset manager, they want to report correct things to their investors, etc. To be blunt, a lot of the big institutions just don’t have those capabilities or experience. It’s much more profitable and expeditious to retain and engage professional people who have that experience, rather than to try and duplicate it themselves.

GlobeSt.com: You gain hundreds of properties all across the country. How are you going to wrap your arms about that?

Kadish: We have regional folks around the country, but we’re also retaining some of the former Credit Suisse people to supplement our own. We’re rapidly gaining knowledge of every single property.

GlobeSt.com: Did being able to pay in cash give you an advantage?

Kadish: There were a number of people, probably 10 or 12 or 15, that did have the same capability we had to put out equity, but there were also a number of others that didn’t. They sort of fell by the wayside in the first round of negotiations, So when we got into the second or third around, there were a good five or six of us that I considered competent folks that has cash on hand that could have done the deal if that was the sole requirement. But we’ve been in existence for 17 years, and have worked with virtually every big name in the business, from BlackRock and Principal, Hartford, Principal, Prudential, Fannie Mae, etc. But we sort of remained under the radar screen.