Ken Bacon became quite familiar with the multifamily industry while working at Fannie Mae for more than 19 years. But now he’s getting a lesson in the business from the other side of the table as he launches his own company.
Railfield Realty Partners will bring Bacon together with three other former Fannie Mae executives to invest in multifamily properties across the Sunbelt.
Bacon worked his way up to the head of the multifamily division of the government-sponsored enterprise (GSE) before retiring in 2012. The other ex-Fannie execs, Darren Thompson, Jon Siegel and Todd Watkins, each held crucial roles at the GSE during Bacon’s career. Thompson worked as the head of analytics, while Siegel and Watkins both worked as senior executives under Bacon.
The new company, which was announced Wednesday, secured a $50 million equity commitment from a U.S. public pension fund to get started.
This is a whole new point of view for Bacon, who is excited and anxious about the new adventure.
“Being on the equity side is different,” he says. “You have to look at risk differently. The risk and reward is different.”
Thompson is the one who approached Bacon about starting the new company.
“[Bacon] has the perspective, relationships and gravitas the can only come from many years in the corner office of a leading industry player,” Thompson says.
Bacon plans on working his rolodex to garner more resources in the coming years. Meanwhile, he also wants to hold true to lessons and business practices the group used at Fannie Mae, and apply them to investments in quality urban properties.
“If you’ve been at Fannie a long time, you’re always concerned about providing quality, safe and affordable housing,” Bacon says.
While the company isn’t looking to dive into tax credit or traditionally affordable properties, they’re hoping to invest in B+ properties and make them available at affordable rates for the working class.
“We share a common vision for building this enterprise and for supporting the U.S. housing industry,” Thompson says.
The group’s first quest will be tackling the Lone Star State, Bacon says.
“We liked Texas because it’s a growing economy and there’s a need for housing,” he says. “Even though we all think of Texas as the wild wild west, Texas is actually one of the biggest urban states in the country.”
The company doesn’t plan to run the properties it invests in initially, Bacon says.
“We plan to partner with best-in-class local operators,” he says. “What we hope to do one day is after partnering with them, then maybe we will do something joint with them. We’d like to invest together. But for right now, we want to get the best-in-class managers.”
Lindsay Machak is an Associate Editor for Multifamily Executive. Connect with her on Twitter @LMachak.