Building on Momentum
By Jan Wilson
Donald Witmondt’s business motto is: “find a solution and never give up.” As the firm that he founded, Woodmont Properties, celebrates its 50th anniversary, it too is being lauded for not just surviving, but thriving, through the worst economic downturn since the great depression. Through “good management and intelligent choices,” says Eric Witmondt, Donald’s son and chief executive officer of the firm, the company has not only managed through the downturn from 2007 to today but has grown its business significantly and has assembled and executed on a substantial development pipeline throughout the region.
“The ability to obtain and maintain financing because of our lender relationships has been one of the keys to our success, regardless of the financial challenges inherent in the marketplace,” says Eric. “We have not only continued to grow our market share in a shrinking market but have also significantly expanded into a regional developer / investor because of our solid track record and reputation for delivering on our promises.”
A History of Creative Solutions
Woodmont has always been known to approach its real estate projects with resiliency and steadfastness, a trait that Donald first showed when starting out in the business. “I remember a situation where I was so eager to meet with a client that I didn’t realize that I was walking into a glass door,” Donald says with a smile. “We were able to conduct our meeting—I just wrapped a bandage around my wrist that was cut when the glass door shattered and then went to the hospital after the meeting.”
He later took that ‘can-do’ attitude to Louisiana, where he had been hired by International Paper Co. as a consultant to sell over 1,000 acres of timberland. “I had to sell several parcels of waterfront land and had to figure out a creative way to market the properties that did not have road frontage, so I rented a row boat and erected huge signs in 100° heat all along the waterfront myself,” he says. “Those signs initiated calls from buyers and landowners along the lake which eventually led to land sales. That’s when I realized that there’s a way to meet any challenge if you put your mind to it.”
As his real estate brokerage business grew in New Jersey, sometimes he needed to meet challenges by buying land from his own listings. “If I couldn’t find the right buyer, I had such a strong belief in my product that I would buy the land myself, which is how our development business was born,” Donald says. “One of the firm’s first major developments, in the mid-1960s, was a listing I had in Randolph. The owner filed for bankruptcy, so I bought the land.” It was later developed into 40 single-family homes.
Today, with the real estate market showing signs of recovery, Eric says that one of the factors that kept Woodmont strong through the leaner years was keeping the core team of executives together. “We collaborated well, and maintained a commitment to the company and each other,” he says.
Indeed, the firm is known for having a collaborative process amongst both its partners and executives which ensures good solutions will be developed for the thorniest of problems. “We all have a focus on getting to the finish line,” says Lewis Zlotnick, President. “At Woodmont, our culture is all about staying with it—there’s always an answer to the question of how best to develop any property…sometimes it just takes a long, long time.”
Stephen Santola, Executive Vice President, General Counsel, who works very closely with the communities where Woodmont invests, says that municipal officials also appreciate the creativity and diligence that the firm brings to the table. “We finish what we start, taking on challenging sites and enduring economic downturns and lengthy approval processes,” he says. “Our goal is to offer options to assure the end result is a property both we and the community can be proud of.”
That philosophy of Woodmont putting the responsibility of meeting its obligations to lenders, municipalities and clients first has solidified its reputation through the years, and created good will in the communities in which it does business.
A Wealth of Capabilities
The many integrated facets of Woodmont’s operations allow them to perform in ways that their competitors cannot easily match, which is one of the reasons that the firm has $300 million in ongoing construction and another $1 billion in the pipeline. “We have a large emphasis on quality control because as a vertically integrated company we manage most functions ourselves,” says Zlotnick. The firm has in-house engineering, legal, accounting, financial analysis, property management and marketing capabilities, as well as its own construction team led by Howard Irwin, Vice President of Construction. Irwin joined the firm in 2010 after having served as a senior vice president of construction with a major regional home builder. “We are also broadening our base of project managers and field operations staff (in past year we have added twenty-five people to our construction staff) as well as increasing our finance office staff to ensure that the development of our new projects run efficiently,” says Steven Varneckas, PE, Vice President and Director of Development, who is responsible for obtaining real estate project entitlements and performing due diligence in the evaluation of new acquisitions.
The marketing strength of the organization can be seen in its efforts towards branding Morristown as a hot real estate market. “Along with our partners Roseland Property Company, we established downtown luxury living in a suburban environment with our initial mixed-use luxury condominium development, Vail Mansion,” says Santola. Then the firm’s Highlands at Morristown, located at the Morristown train station, “confirmed the viability of New Jersey Transit’s Transit Village concept with a mixed-use luxury rental product,” adds Santola, who notes that rents are higher than expected and that the units facing the train have proven to be an unexpectedly big draw as residents enjoy watching, in perfect comfort, the coming and going of the trains at the station. The firm’s most recent mixed-use development in Morristown, the redevelopment of the Epstein Department Store site, which is now home to two properties, The Metropolitan, a luxury rental apartment complex and 40 Park, a luxury condominium project both anchored by a lively ground floor retail and dining scene.
Woodmont is also active in Bucks, Lehigh and Northampton Counties in Pennsylvania, “where we are creating our own market,” says Michael Witmondt, Director of Marketing, who oversees the firm’s communities, through its expertise in studying demographic trends and analyzing what project niche is missing from an area. “In our multifamily rental communities, our approach is to develop amenity-rich properties. Luxury rental apartments are fairly new to this part of Pennsylvania, and the area has responded extremely well to the concept.” Many communities throughout the region are seeking ways to hold on to their ‘empty nesters’ and young adults returning from college. Woodmont is providing the solution by drawing this demographic to a well-located, amenity-rich, denser form of residential and mixed-use development. “This is a strategic way for suburban areas and small towns to keep long-term residents in their hometowns, rather than losing those valued residents to vacation communities or major cities elsewhere in the country.” stated Michael Witmondt.
Remarking on the firm’s core strengths, Zlotnick says that the firm’s success rests upon “our strategic planning process, leadership, vision, financial strength, risk management, and most importantly a deep bench, filled with extraordinary people.”
Staying Strong in a Downturn
The firm’s executive team has followed Donald’s example of keeping leverage low and maintaining a strong cash flow that “has allowed us to survive the recession and build through it,” says Eric. “The philosophy that my father started with 50 years ago is still being executed today with ever more sophistication.”
An example is the firm’s expansion into Woodmont Industrial Partners, which was formed in January 2012 and has created a new growth opportunity. WIP has also further diversified the company’s real estate holdings and expanded its institutional business. The group owns and manages a portfolio of industrial buildings, including warehouse, distribution and flex properties near ports or intermodal rail access and is seeking new acquisitions. “We are continuing to look for investment opportunities in select, globally focused port markets that have a high barrier to entry,” says David Trager, Chief Investment Officer. The key markets targeted by Woodmont are northern New Jersey, eastern Pennsylvania, Miami-Dade County, Florida and Baltimore/Washington, D.C. and Houston, Texas.
The firm also is very astute about adapting to an ever changing market and due to its vertical integration it can make the necessary predevelopment programming changes that have been required to prosper over the last several years. Its executives cite as one example Woodmont Square at Bridgewater, which started its life as an adult-active community. “New construction in the active adult market was no longer viable after the recession hit,” says Eric, “but Bridgewater is a very desirable residential community. Therefore, we were able to change our programming to convert the property into high-end market rate rental community.”
The 100-unit property has been very well received by the market and the community and includes amenities such as a clubhouse, fitness center, basketball court, picnic area and ‘tot lot’ all strategically located on ten beautiful acres. Ironically, although originally approved as an active adult community, the development, which contains only two-bedroom apartments, was able to capitalize on a trend at the other end of the age spectrum, namely younger people moving into apartments with roommates in the suburbs, as New York City and the areas close to it are economically out of reach. “The generation that came out of college in the recession found it harder to find employment and harder to create wealth and therefore, aren’t forming families, as compared to those who started their careers during the boom years,” says Eric. “These kinds of projects, which are very attractive and boast a large variety of amenities, meet this demand.”
Vertical integration and diversity of product uniquely allows Woodmont the ability to be creative in good times and bad and makes the firm’s projects very attractive to institutional investors. “Institutions want to work with us because we are stable and have ideas about what to do when projects run into unexpected roadblocks,” says Trager. This helped keep the firm growing during the downturn. “We lead the charge in a market that is shrinking,” says Eric. “Through our strategic planning, relationships with investors, risk management and our extraordinary staff, Woodmont has changed from a small local player to a very diversified regional player.”
SciPark in East Windsor is a four-building, 250,000 square foot business/research and development park designed to appeal to businesses looking for flexible space to support research and development. The first phase, comprised of 65,504 SF, broke ground in late 2006, and is now 100% occupied by a European company. “We continue to aggressively market the remaining three build-to-suit opportunities, which is located in a desirable area less than half a mile from Route 133,” says Trager.
Developing to Meet New Demand
Woodmont has diversified its multifamily rental portfolio through expansion into Pennsylvania and will shortly be announcing a further expansion into South Jersey (outside Philadelphia) and New York. “In eastern Pennsylvania, the workforce is growing, and it remains an affordable option for early retirees,” says Santola. “Many towns around the Lehigh Valley and Bucks County recognize the need to diversify their housing stock beyond their traditional single-family subdivisions, which boomed prior to the recession. We see South Jersey and the Philadelphia suburbs as a very similar market.”
Woodmont Place at Palmer is a nine-building, 216-unit luxury rental apartment community in the Lehigh Valley, with stainless steel appliances and granite countertops. The apartments have been designed with many amenities including swimming pool, dog runs, walking trails, private garages and picnic areas. It also offers a clubhouse with fitness center, game room, business center and barbecue area.
The company also developed Woodmont Mews in Bethlehem. Its nine buildings feature both one- and two-bedroom apartments ranging in size from 948 to 1,307 SF. Woodmont Mews features a clubhouse with a full-service kitchen, fitness center, business center, mail room, and outdoor swimming pool.
“There has been a huge demand for both of our Pennsylvania communities,” says Varneckas. “High end apartments with great finishes are something that the market had been looking for.” Adds Santola: “More young people are moving into the area for healthcare and high tech jobs. These apartments appeal to those residents.” Woodmont has a land/development pipeline in Pennsylvania of more than 1,500 residential units in the region, which can be built over the next seven years.
Luxury for Sale Residential
While maintaining a robust presence in the multifamily rental market, Woodmont continues to build some communities that appeal to buyers that prefer home ownership. “There are certainly homeowners, particularly empty nesters, who are typically “move down” buyers that want to downsize and yet remain in their community close to their long-time friends, children and grandchildren. These buyers are most interested in infill developments that provide luxury living in a desirable area,” says Santola. The response to both The Enclave and Saddle River Grand has been extraordinary examples of meeting this demand.”
The Enclave at Montvale is a 28-home development on a beautiful 19-acre site in Montvale, NJ. The site maintains a forested buffer bordering the property and protecting the eight single family-custom homes which feature roughly 5,500 SF of living space. Twenty high-end luxury town homes (starting at $1,000,000) of 3,700 to 4,500 SF have two-car garages and elevators. The community features a grand entryway, gatehouse and a gazebo.
Saddle River Grand, located in Saddle River, NJ, features homes designed in the style of grand manor homes, in a gated community that provides concierge service and a luxury club house. “This is elegant living, close to the city, in one of the most prestigious communities in Bergen County,” says Santola. “The buyers here don’t want large lots with the headaches that go along with property ownership, but they do want to be able to come home, turn the key and have all of the amenities at their fingertips.” The company started selling the development from plans in October 2011 and by the summer of 2012 all 68 units had been sold at an average price in excess of $1,500,000. Woodmont is actively pursuing approvals for similar communities where luxury living can be provided in premier communities to meet an ever-growing need of the long time empty nester resident who wants to downsize into maintenance free living, but still demands a luxury residence.
A Commitment to Sustainability
“A new priority at Woodmont has become sustainability,” says Irwin. “We want to build with products and systems that can be easily maintained, provide a comfortable and healthy environment for the end user, are energy efficient and, at the same time, know that they will last for decades.”
As an example of the wide array of products that are used, Irwin cites a Dow Chemical building insulation system used in its Red Bank project that creates a tight building envelope and allows for greater energy efficient. “We use an exterior foam type sheathing product called Thermax to create a thermal break from exterior temperatures,” he says. Also at Red Bank the firm is using fiber cement siding, which uses wood byproducts and cementatious materials to create durable and attractive building exteriors.
In the firm’s rental communities, carpeting is made from recycled plastic and energy efficient fluorescent lighting is used in almost all lighting fixtures. Where possible Woodmont applies Energy Star® standards and/or green building standards to its construction specifications.
“At the end of the day,” Irwin says, “these homes are better for the environment and better for their residents. We use high quality products in all of our properties, and the properties are insulated well, increasing comfort, and lowering costs for everyone.”
As a redeveloper, Woodmont knows what it’s like to take on challenging sites and restore them to something that is useful to the community. “In these kinds of projects, you can’t always accurately estimate your costs; the unknowns in redevelopment increase the challenge in transforming the property,” says Varneckas. “Few developers have the resources to take on these challenges, but it is very satisfying to take an ‘orphan property’ and turn it into housing or a commercial use that will benefit the community and its tax rolls.”
Woodmont at South Amboy, when fully approved, will include 86 townhomes and a state-of-the-art nursing home being developed by Venetian Health Care. The 14-acre site is in the heart of Middlesex County and within walking distance to the NJ Transit station. “We broke ground earlier this year and the complex remediation and site work will be complete by year end,” Varneckas says. “This well-located formerly abandoned industrial site is being developed with reasonably priced townhomes primarily with rear loaded alleyways following New Urbanism design principles in a transit-oriented development.”
In Hanover, Woodmont has just begun constructing Woodmont Knolls, a 126-unit apartment community ideally located at Route 24/ Route 287 and Route 10. In addition to the new development, Woodmont is restoring a portion of the Patriots’ Path that runs along the site and extends into Morristown; a unique amenity for its residents. “This site was originally approved for office use, and later as an active adult community,” says Santola. “When that market weakened, we were able to work closely with the community and have it approved for market-rate housing with an affordable rental element. This is another example of our ability to be creative adapting into changing markets.” The community will include individual garages, on-site storage bays, fitness center, club house and swimming pool.
A Leader in New Urbanism and Redevelopment
“In today’s market, so many people want to live an urban lifestyle,” says Eric. “And we are constantly assessing opportunities to bring housing into cities and urban rim suburbs.”
Located in the heart of Red Bank’s arts and antique district, Woodmont is developing West Side Lofts at Red Bank in partnership with Metrovation. “This one-of-a-kind mixed-use, artist loft project is a bellwether for downtown redevelopment in New Jersey,” says Santola. “It will, no doubt, be the hippest redevelopment project in New Jersey.” The approximately two-acre site is located one block from the NJ Transit train station, will include 77 lofts, 10 townhomes, 23,000 SF of retail space, including a Triumph Brew Pub, a 221-car parking garage, and three live/work artist lofts. The West Side Lofts are adjacent to the new Two River Theatre and construction is underway. “This was a complicated site that was originally slated to be condominiums,” says Eric. “We felt the one piece missing in downtown Red Bank was a luxury, hip, amenity-rich apartment community. The Lofts will provide the location and housing experience that young professionals desire.”
West Side Lofts will join 40 Park and the Metropolitan and the Highlands in Morristown and South Amboy as signature Woodmont projects that utilize proximity to a train station as well as other attributes of the downtown core—accessibility to transit, walkability and convenience of services and shopping—to create the best aspects of the urban experience. “We know that the reality of the market has changed,” says Eric. “There is still a need for housing, but people want it in a different format—they aren’t anxious for the large single-family home on a sizable plot of land. Whether it’s for the retiree who wants to walk to downtown or the busy commuter who needs to be close to a rail line, we think that in-fill, downtown developments will continue to be popular and we will continue to pursue opportunities to meet this demand.”
“Our path to success,” states Eric, “has always relied upon our ability to maintain and execute on our pipeline of projects.”
The company’s executives see continued growth for the firm in two primary areas as it both anticipates new trends/demands and also responds creatively to the ever changing market. On the residential front, Woodmont currently has over 2,000 residential units in development and “will continue to develop our strategic plan and vision to make sure that we grow our residential pipeline by analyzing and predicting market demand over the next five years,” says Zlotnick.
Capitalizing on its core strengths and experience while catering to geographical and demographic trends of Baby Boomers and Generation X, which includes the desire to have more amenities, less square footage, no maintenance and better access to both New York City and public transportation, means that the firm will look towards more urban and infill residential projects to meet those market demands.
Secondly, Woodmont’s aggressive expansion into the “port-related” industrial market signals a plan to diversify its existing commercial portfolio. Woodmont has partnered with Marc Lebovitz (whose family has been an owner/operator of logistical operations in California, Texas, Florida, Pennsylvania and New Jersey for over 50 years) to form Woodmont Industrial Partners. This venture is backed by AEW Capital Management, a $45 billion real estate investment manager that has already acquired more than 1.5 million SF of industrial space, and is eagerly pursuing new deals.
Working with joint venture partners such as Roseland Property Company, Prudential Real Estate, AEW, Guggenheim and Grovesnor Residential Holdings, among others, the firm will continue to capitalize on the fact that it has not only been able to hold on to assets during the most recent downturn, but has expanded and completed projects even when the period from acquisition to development has been long and challenging.“Each success begets success,”says Trager. “We want to work with people who want to work with us. Our track record provides us goodwill so investors seek us out, landowners want to be our partner, towns want us to invest in their communities, lenders trust our ability to perform and the end user knows they are getting a quality product built, owned and managed by Woodmont. We stand behind everything we build.”_