Cathedral Development Group Inc. has built a stable portfolio of apartment properties, benefiting from demographic changes that are creating more demand for long-term rentals.
Consumer interest in well-maintained, well-located apartments is rising across the U.S., and in many cities, vacancy is low.
Cathedral, based in Providence, has found its niche in purchasing apartments that need updating but not major rehabilitation. It now owns, and manages through a sister company, more than 3,500 units in five states.
The company, now led by President Robert Gaudreau Jr., has expertise in federal programs that provide tax credits for development of affordable housing for low- and moderate-income tenants, including for the elderly and disabled.
In Rhode Island, where the company was established in 1998, Cathedral owns 18 apartment complexes in 11 cities and towns. It was created as a sister company to Property Advisory Group, which was founded by Gaudreau’s father, Robert Sr., and Jack Bentz in 1975.
Typically, Cathedral invests in properties that have between 50 and 300 units, valued between $5 million and $50 million, according to Gaudreau.
Demand among investors for properties in affordable housing has increased in recent years, he said. It’s seen as a stable asset.
“With just a little bit of work, a little bit of value-add, you can add to your return,” he said.
In Providence, among the company’s earliest acquisitions are two apartment buildings in the Cathedral Square development, called Cathedral Square Apartments I and II, which have 190 units between them occupied by elderly and disabled tenants.
Last year, the company received authorization through Rhode Island Housing for a refinancing to allow a rehabilitation of the 100 units in Cathedral Square Apartments I.
In 2015, the company closed on $44 million in refinancing to renovate the Western Ho Apartments in downtown Phoenix, Ariz., a 289-unit affordable housing tower, also focused on elderly tenants.
The restructuring allowed the company to invest $14 million in renovations.
Purchased by Property Advisory Group when downtown Phoenix was struggling economically, in the early 1970s, the former hotel is now surrounded by luxury properties, Gaudreau said.
Of its commitment to affordable housing preservation and development, he said the development team is knowledgeable about the process for working with federal and state agencies. It’s more regulated than development of market-rate or luxury properties.
“We’re committed to it because I feel like we’re experts in the field,” he said. “Our affordable housing team is as knowledgeable as any development team in that business. We’ve been in it since the affordable housing program was enacted. We work well with the government. We work well with Rhode Island Housing. We do market-rate housing too, but [affordable housing is] something we feel comfortable with.”
OWNERS: Robert Gaudreau Jr., Scott Gaudreau, Arthur Kramer
TYPE OF BUSINESS: Real estate development
LOCATION: 5 Cathedral Square, Providence
EMPLOYEES: 75
YEAR ESTABLISHED: 1998
SALES: WND