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Mar 01, 2021

In Person: Investing for the Long Haul in Multifamily Properties

Banker & Tradesman

February 28, 2021

By Steve Adams


Five years after joining Newton-based Northland Investments as chief investment officer, Matthew Gottesdiener is taking over the multifamily investor’s leadership role in the CEO’s office. His father and the former CEO-turned-chairman, Larry Gottesdiener, built the firm’s 26,000-unit portfolio with a focus on garden-style suburban apartments in New England and the Sunbelt. The firm is expanding its national portfolio with the recent entry into new markets including Atlanta, Denver and Albuquerque. At the same time, it’s preparing to break ground on one of the largest projects in suburban Boston: the transformation of the 22-acre former Clarks Shoes headquarters property in Newton Upper Falls into a 1.1 million-square-foot mixed-use development.


Q: How long has the succession plan been in place and why was this the right time for a change of leadership?

A: I joined the firm five years ago and my father had a concrete set of goals for improving the fundamental quality of the portfolio by selling some of the older assets and adding more core and luxury properties, and a culture that would be more transparent and supportive and put our tenants, employees and investors first. During the pandemic, we took a look at how we’ve done and what the structure was for continued success. That began in the summer and was about each of us focusing on where we could make the most impact.


Q: What’s the average age of the properties in the portfolio?

A: When I joined, it was 1990 and currently it’s 2003. We fundamentally have two core investment strategies. We have the business we’ve done since 1991: Buying predominantly garden-style suburban assets that are undercapitalized or undermanaged, with a 10-to-20-year hold horizon, and transforming the community. The complementary piece that’s grown into half of our building is buying best-in-class, class A-located infill assets, predominantly luxury, with a 20-to-50-year hold horizon. We’re currently investing our eighth fund, and will acquire $400 million to $500 million, investing $100 million of equity.


Q: What’s Northland’s strategy on the development side?

A: In the early 2000s, we slowly and carefully started to build a boutique development business, focusing on New England only, that would use almost exclusively our own capital. One of the most foundational aspects of Northland’s DNA from our founding to today is to be our largest limited partnership investor and never be less than 20 percent of the equity in a fund or investment. Development takes that to another level. As we grew, we invested 70 percent of the equity. We had to build a competency, and it’s your own capital you’re risking.
The Merc in Waltham [which opened in 2018] is an iconic development project. We took an office building and a bank at a “Main & Main” corner and a transit-oriented site that was ripe for redevelopment, in what we believed at the time was not a best-in-class suburb, but we continued to believe that the flood of jobs would lift all tides including Waltham. One of my goals will be bridging this patient boutique New England development niche with our national acquisition business.


Q: What was the key to winning the referendum in Newton approving the Upper Falls project, including 800 apartments?

A: We were thrilled that Newton voters said yes after three years and hundreds of conversations in the city. Newton is home for us, and for me personally. By putting 1,400 parking spots underground in Newton, it’s not just that the project is permeable, but we’ll have an unprecedented level of green space and open space where the structured parking would have sat. Now it’s about the future of the site and getting in the ground. We’ve spent the last 10 months in development review by the city and moving towards the construction loan. As we look across the country to markets like Atlanta and Denver and Austin where we’re growing, we’ll bring that same quality to our national platform.


Q: What’s some of the most useful advice you’ve received in real estate?

A: Have a commitment to your core principals, do what you say and make decisions for the long term. That’s the advice I’ve been given and how I hope to lead Northland in the coming decades.


Gottesdiener’s Top 5 TV Shows:
1. The Marvelous Mrs. Maisel
2. The Wire
3. La Casa de Papel
4. The West Wing
5. The Sopranos