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Alexander Shing
Title: CEO, Cottonwood Management
Age: 40
Industry experience: 20 years
If you’re a developer in Boston, Alexander Shing might want to give you a loan. Shing’s Cottonwood Management is best known for leading the biggest current construction project in the Seaport District, the $950 million EchelonSeaport complex. At the same time, Cottonwood is seeking to finance other developers’ ventures in Boston and beyond, seeing opportunities for growth in select metro areas. Last year, Cottonwood and partner CCB International closed a $55 million credit facility for an Aloft Hotel at Manhattan’s Hudson Yards. A Massachusetts Institute of Technology graduate who previously worked in software and private equity, Shing founded Cottonwood in 2011. The company has completed over $3 billion in real estate transactions in nearly a dozen U.S. metros.
Q: How did you arrive at the business model for Cottonwood Management?
A: When we started the company, we focused initially on debt financing of real estate projects and, in particular, construction debt. At the time in 2011, we were just coming back from the credit crisis and a lot of banks had restructured how they provide credit. So we started our business providing construction debt, acting as a principal and managing the construction debt actively.
Out of the crisis, if you were able to extend nine-digit credit to people at that time, you make a few friends. Your relationships grow and we started identifying some very interesting opportunities as well, like the one in the Seaport. We first tried to finance parcels B and C, and we weren’t quite ready and it didn’t happen. When there was an opportunity to acquire parcels M1 and M2, we jumped at that in 2014. By 2015 we owned the parcel.
That was the expansion of our business from the debt side to equity. We’re now able to invest in any part of the capital stack. We can provide acquisition financing, construction debt, all the way down to the mezzanine and junior debt. Once you’re done we can provide transitional financing as well.
The only investing we don’t do is the stabilized assets. That’s the CMBS world and that’s almost like a production line.
Q: What’s the fastest-growing piece of your business in 2018?
A: In 2008, if you were an equity-only fund, you would have a very horrible life at that time. Your mandate is to invest in equity and things were overpriced. We’re 10 years into this cycle. We think there are pockets and markets around the country that still remain very strong. Boston would be one of them, but also there are some areas where we see weakness, such as New York.
For us, knock on wood, we’ll soon be announcing the financing on a multibillion-dollar project in Los Angeles for $310 million in senior construction debt. We’re also seeing some demand for mezzanine debt as well as banks shrink their ability to leverage. Our focus has always been to finance some of the largest and most complicated projects.
Q: What makes Boston a good investment in the multifamily sector?
A: I went to school here and I’m familiar with the area and the Seaport. We all knew going back to when I was going to school that it just needed some critical mass before the Seaport kicked off. Boston is a very old city and the development is limited to urban infill. If you look at the mixed-use residential, I challenge whether anybody has a 4-acre site to work with where you could build a project the right way and all the amenities that we can offer.
Other projects are being built on a 10,000 to 12,000-square-foot footprint, and there’s very little you can do when your floor plates are limited. Those are sitting in the original part of Boston, not in a 21st-century urban master-planned area like the Seaport. The second part is Boston has done a good job upgrading its infrastructure. And there’s a supply of talented human resources.
That’s why we’re so eager given our business model. We saw the M parcels as a superior opportunity where we want to jump in with both feet. That was a good equity opportunity for us to develop, but we’re investors at heart. We’re looking to develop selectively and also OK to invest and develop with an equity partner, or if someone is already funded, we’re happy to write the debt.
Q: Since the sales office opened in April, what demographic profile are you seeing in the EchelonSeaport buyers?
A: We’re getting quite a balance. It’s been received very well. I have one capital partner who was visiting town two weeks ago and when we wanted to see our sales center I couldn’t even get him an appointment. We had to squeeze him in late in the day. The tours and appointments from brokerage and prospective buyers have been tremendous.
We are really seeing some very large luxury unit buyers, the more well-established buyers, who love to be in the city and want all of the amenities. The terraces on the largest units are very unique so we’re attracting young professionals who feel this is close to their work, especially in tower two, which caters to the young professionals. We’re not giving out (sales figures) but the momentum and velocity has been tremendous.
Q: Why did it make sense to use the EB-5 program to help finance EchelonSeaport?
A: I would say at the time when we made the acquisition (of the M parcels) in 2014, Boston Seaport is not what it was then. It really takes someone to look at the Seaport with a little bit of vision. People were really taking a gamble here. One way you qualify for EB-5 is the area you’re in is a low employment area. I always joke with people it was a no-employment area. There was no General Electric, no Amazon.
It’s easy to go back in hindsight. In 2014, with a little bit of tailwind and luck and foresight, it really materialized. Our project is an ambitious one. We’re building all three towers at the same time. It’s a large footprint, it’s ($950 million), the largest development in Boston and New England outside the Wynn casino. We’d love to do more in the Seaport, but more heavily we are looking at financing opportunities where we can partner with a local developer.
Q: Would you invest in an air rights project, as developers try to finally get those off the ground in Back Bay and the Fenway?
A: Sure. We’ve never ruled it out. Those have engineering challenges, but we’re building on top of the Silver Line tunnel (at EchelonSeaport) and that didn’t bother us. So if you happen to be talking to those developers, tell them they can give me a call.
Shing’s Top 5 Red Sox Players of All Time (in No Particular Order):
- Ted Williams
- Pedro Martinez
- David Ortiz
- Dustin Pedroia
- Mookie Betts
