548 Capital is purchasing vacant land and redeveloping it into solar farms. While, solar energy can drastically reduce utility costs, the political landscape and startup costs may deter most. AJ Patton found a way to earmark solar energy for affordable housing that redevelops communities without gentrifying them. On this episode, he shares why solar energy is important, how he gained political support, and how he drives profits without drastically increasing rents.
Key Insights
Started with Duke Realty and went to HSBC
Took a job for a Hong Kong firm and was there for 10 years
Worked at a Hong Kong firm on convertible debt, ski resorts, islands, pipe transactions, etc.
A friend called and requested $10 million to build a solar farm and then sell the energy to a Fortune 500 firm
Asked friend about creating solar farms and selling to low income families
Own and operate the solar and energy into the portfolio
Building a 9 mega-watt solar infrastructure and earmarking the energy as a discount (malls, municipalities, and buildings) – will power 1,700 units
Energy sold at a 20% discount to the market
Creating these farms in the city, converting old steelmill gravesites to purchase and redevelop these spaces
Power52 is partner, founded by Ray Lewis and Rob Wallace
Job creation and education make it easier to work with the city
An environmental consultant put AJ together with Ray Lewis
Goal is redeveloping communities without gentrification so current residents participate in the ascension of their own neighborhood
The low 25% census tracts are Opportunity Zones, if you invest in these communities you can get tax deferrals on capital gains from stocks
Up to 15% can be forgiven on federal level
Redeveloping 3,000 units on the South and West side of Chicago
Doing rooftop solar on these buildings as well
Cut the utilities by 1/3, lessens the burden to raise
Using investor capital only, not using LIHTC (low income housing tax credit) or TIF (tax increment financing)
Our return profile is competitive and we’re doing the good
It has to be housing, jobs and education to invest in a community
Put together a team featuring Erica Johnson to lead up construction and development and Charles Cole who was a partner on another fund
Grew up in Section 8 Housing in Unit 548, Erika is from the same projects
Partner: Check out the Northstar Real Estate Conference on Sept. 21 and 22
Bull’s Eye Tips:
Winning Your Market: Community buy-in, let folks know the why
Tracking Market Changes: Be an open source and be available
Daily Habit: Up at 5am and read for 50 mins
Resources:
Dude You’re Going to Be a Dad by John Pfeiffer
Best Business Books:
Wall Street Journal
Digital Resources:
G Suite
Tweet This:
“Mission alignment is key”
“The low 25% census tracts are Opportunity Zones, if you invest in these communities you can get tax deferrals on capital gains from stocks”
“We’re not interested in curating a neighborhood”
“It has to be housing, jobs and education to properly invest in a community”
Places to Grab a Bite:
Ja Grill in Hyde Park
RPM Steak
Chicago Cut
Connect with AJ:
Website: 548capital.com
Twitter: @AJPatton10
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