Scaling a Promising Pilot, Creating a New Asset Class
A White Paper
In 2010, Brush Park was a disinvested residential neighborhood, separated by a freeway from Detroit’s downtown business district. A few Victorian homes remained, but most had long ago been subdivided into tenements or dismantled to make room for apartment buildings after affluent Detroiters fled to the suburbs. Investors had begun acquiring properties at low prices and planning large-scale redevelopment. By 2020 — a mere decade later — Brush Park had undergone wholesale renewal, with high-end condominiums, a sports arena, and a new business school. But for the two thousand residents who had lived there, development meant displacement from the neighborhood they knew.
Brush Park illustrates a contest playing out in countless communities across the country. Institutional investors, seeking wealth-building opportunities, systematically buy up real estate in neighborhoods with rising property values. Organized residents, fearing gentrification, seek to block development. City governments then face an untenable choice: help attract outside capital, driving economic revitalization and replenishing the tax base; or attempt to slow gentrification, protecting local renters from eviction. Many cities attempt both, enacting contradictory policies that only exacerbate the conflict. Without mechanisms to align their interests, investors and residents remain irreconcilably opposed.
But consider another way: what if Brush Park renters had been able to buy shares in their neighborhood in 2010, just as land was consolidated for revitalization? With a 267% appreciation and prevailing cash flows for apartment buildings, a household investing $1,000 would have earned $4,100 from residential buildings alone by 2020. Had they been able to participate in large revenue-drivers like the sports arena, their investment would have yielded greater returns. And if they were permitted to pre-purchase shares, earnings might climb to $50,000 per family, the equivalent of Detroit’s median annual income. Finally, what if affordable housing had been preserved, so that residents could stay while building wealth? Might outside investment have been a good thing for everyone? This was the question we set out to answer.
We ultimately concluded that the vehicle that could achieve all of these objectives would be a “Neighborhood REIT.” The first Neighborhood REIT, Nico, was piloted in Echo Park, a transitioning community near downtown Los Angeles, in 2020. Co-founded by one of our team, Nico acquired three apartment buildings for $30 million. Though relatively small in scale, it offered the key proof points we needed. The SEC authorized the entity, legitimating it for the essential accredited investors who made the acquisition possible. And some five hundred tenants and other residents acquired shares and earned dividends, even during a citywide rent moratorium. Nico also provided insights into the market conditions best suited for a Neighborhood REIT, the capital volume required to cover administrative costs, and the potential for mobilizing a groundswell of grassroots interest.
With these insights, we set out to assess the feasibility of scaling this model, exploring the potential for setting up larger Neighborhood REITs in cities across the country. In twentyone locations from Boston to Honolulu, we engaged with local partners to identify potential land assemblages large enough to include both growth-oriented and affordable projects. We interviewed eighty institutional investors, asking what it would take for them to profitably capitalize these efforts at scale without overwhelming resident objectives. And we engaged federal, state, and local government to consider the policy guidelines, levers, and financial incentives that could enhance wealth building for investors and residents alike.
Along the way, we were joined by respected partners who are co-creating this venture with us: community groups, institutional investors, philanthropic foundations, preeminent research and policy institutes, professional associations in the real estate industry, and public officials at all levels. They share our conviction that Neighborhood REITs can break the stalemates that obstruct investments in cities; unlock much-needed capital for community development projects; and replace negative narratives about gentrification with more inclusive possibilities. More existentially, they can meet our national need to address the racial wealth gap and affordable housing shortage. And they can mark a return to a bipartisan vision of an ownership society.
Together, we are now building an enterprise that will support the formation and capitalization of Neighborhood REITs. This document reports on that undertaking.
In her classic book, The Death and Life of Great American Cities, Jane Jacobs compared capital flows into and out of neighborhoods to the effects of water on ground soil in a garden. In one extreme, there are neighborhoods where there simply isn’t enough capital coming in, creating conditions of prolonged disinvestment or “drought.” At the other extreme are the communities where too much capital “floods” in too quickly, cataclysmically extracting and carrying away the financial benefits. Her analogy suggests that neighborhoods need “irrigation systems” to distribute capital so that it can be absorbed by individual households and small businesses.
Inadvertently, our inherited community development infrastructure has prolonged the drought. As originally conceived in the sixties, community development corporations (CDCs) were never supposed to treat communities as closed systems or to act as bulwarks against outside capital. They were intended to perform transitional roles: attracting capital; steering it to affordable housing; and then becoming obsolete as the local economy stirred to life. In practice, CDCs were unequipped to manage the tremendous volumes of capital that flowed into many neighborhoods in subsequent decades. Over time, they adopted a flawed re-orientation: instead of leveraging outside capital to build housing, they tried to compete with it.
Half a century later, the community development field holds fiercely to this outmoded mindset. Housing cooperatives, for example, enable residents to collectively own a building but generally limit themselves to member-raised funds. CDCs, backed by public subsidies and CRA loans, are in a better position to construct new housing. But they, too, lack the capital to develop at the transformative scale they envision. Community land trusts insulate land from rising prices and decouple homes from land deeds to increase affordability. But homes without land titles neither gain value nor build wealth for owners. In this undercapitalized state, even wellexecuted efforts seem quixotic. They fail to foster economic mobility or meet basic affordable housing needs.
Institutional investors, on the other hand, do possess the capital needed to redevelop at a neighborhood scale. They simply aren’t set up for heavy pre-development work, earlystage deal formation, or community relations. Instead, they seek more secure, immediate opportunities: the acquisition of income-generating assets or the financing of packaged, shovelready projects. In fact, the efficiency of these capital floods is what fuels public fears. It leads to stronger government limitations, stricter zoning, longer approvals, steeper taxes, and reduced subsidies. Disciplined by risk management and return optimization — and reputationally bruised by criticism — many investors are reassessing whether transitional neighborhoods are worth the effort.
The tension between institutional investors and residents need not end in stalemate. If both sides can commit to mixed-income future for the neighborhood, their interests can align. At the portfolio level, market-rate projects can cross-subsidize affordable housing, incentivizing government to help. And despite outspoken opponents to development, residents overwhelmingly embrace the idea of a mixed-income communities. The challenge is to curate, parcel-by-parcel, a balanced portfolio that delivers returns and meets local needs.
Another way to achieve alignment to enable residents to own shares alongside big investors, merging their interests. For the second half of the twentieth century, such a notion was implausible: average Americans considered home ownership their safest path to financial security; and as unaccredited investors, they had few other options. More recently, though, the financialization of housing as a traded commodity has destabilized its value and affordability. Many now see homebuying as a high-risk prospect, especially after the 2008 subprime loan crisis. And in 2012, the JOBS Act authorized crowdfunding, for the first time allowing small dollar investors to be fractional real estate owners.
There already exists a recognized, regulated structure that, with a little adaptation, can align crowd funding with institutional investments. Approved by Congress in 1960, Real Estate Investment Trusts, or REITs, were created to allow investors to own shares in incomegenerating real estate portfolios. In a conventional REIT, that portfolio is comprised of a single asset type — like student housing, medical facilities, or shopping centers — that can be located anywhere. In our version, the Neighborhood REIT, it includes a mix of property types clustered in a one geographic community. And while conventional REITs are intended for accredited investors, ours includes resident shareholders, too.
Here, then, are the ingredients of a persuasive argument for how capital can be attracted to disinvested neighborhoods while also benefiting residents. The case we are making is fundamentally market-oriented: while some activists aim to “dismantle” capitalism, we insist on working within its realities, addressing ordinary market imperfections, and realigning interests to achieve better societal outcomes. We reject outright the claim that racial equity and inclusion require an anti-capitalist posture. In fact, Neighborhood REITs offer a promising corrective to the racial wealth gap. And for American society at large, they could usher in an era of more distributive property ownership.
But can this theory really translate into practice? Can a Neighborhood REIT meet the specific affordable housing objectives of a community while delivering solid market returns? Can it draw on the ground-level intelligence of local leaders, supplanting older models of community development with new bridge-building partnerships? Will governments and philanthropic foundations find the overall narrative compelling enough to align their own resources? These are the operative questions we set out to answer together, beginning with a real-world pilot case.
Lessons from Nico, the First Neighborhood REIT
The Neighborhood Investment Company, or Nico, was the first official Neighborhood REIT.
Nico formed as a benefit corporation, a legal designation that protected its ability to balance social outcomes with profit optimization. It raised $30 million in venture capital to acquire three large, affordable apartment buildings, one with storefront retail space, in the rapidly developing Echo Park neighborhood near downtown Los Angeles. In 2020, it secured SEC approval as a REIT, with a Tier 2 Reg A-plus public offering for small-dollar investors. Building tenants were invited to “build equity while renting,” by making incremental investments in addition to their monthly rent payments. Roughly five hundred households, purchased common shares starting at ten dollars.
After a three-year run, it was dissolved: revenues from a handful of rent-controlled buildings could not sufficiently cover administration costs, especially during a rent moratorium. And as local renter protections effectively devalued affordable housing as an asset, Nico’s leadership needed to guard the short-term interests of its small investors: residents were better off receiving dividends from their first years of investment than watching the buildings lose assessed value. As a pilot, though, Nico delivered critical proof points: it demonstrated that the SEC would authorize a Neighborhood REIT and that residents could own shares and earn dividends. It also affirmed the need for a larger, more diversified set of assets, including market rate projects, to achieve threshold returns.
In its few years of operation, Nico had only begun to tap its resident engagement potential. While real estate transactions can move at lightning speed, resident engagement moves at the speed of trust. This is especially true of residents who are unfamiliar with investing, feel they can’t afford it, or distrust it. Nico succeeded in selling shares to some residents. But to accelerate participation, it also met hesitant tenants where they were, offering free introductory shares and even rent assistance. Had Nico continued, its organizers were poised to undertake a sustained grassroots mobilization, enlisting natural influencers and informal associations to touch thousands. Blocks of shares might have been held aside for later distribution or reinvested in local development projects.
In short, Nico was directionally correct and indicative of what larger, more highly capitalized Neighborhood REITs could look like and achieve.
For more information about Nico, see “Nico Echo Park, Benefit Corporation, Preliminary Findings of the First Neighborhood REIT,” November 2021 by Max Levine at mynico.com
Growing a Pipeline of Neighborhood REITs
Even while Nico was underway, we began working with local leaders nationwide to identify other prospective Neighborhood REIT sites. We sought areas where values were appreciating but had not yet escalated prematurely. We also sought places where it would be feasible to assemble a sizeable portfolio of properties, one that could help steer the neighborhood’s overall trajectory, yield returns, and protect existing housing and business districts. Most were situated near freeways, rail lines, downtowns, or expanding university or hospital campuses. Where possible, we paired leaders with firms like Jones Lang LaSalle and Ernst & Young, who prepared parcel maps or conducted initial market analysis.
While all of these neighborhoods lay in the path of future development, they varied considerably in terms of the level of outside investment to-date and the degree to which gentrification or displacement have occurred. This variation enabled us to test the adaptability of the Neighborhood REIT idea across different contexts. As we have built a broad base of knowledge about these many distinct market opportunities across the country, we have found it helpful to classify sites into three categories, articulating each as a distinct Neighborhood REIT archetype:
Buy & Build (B2)
For transitional communities, where property values are rising.
To protect affordability, a REIT can acquire an inventory of existing work force housing. By purchasing stabilized, cash-flowing assets, the REIT reduces its risk exposure. And if the assets are near an expanding university, hospital, or other engine for market-rate development, the REIT can invest a portion of its capital in these projects or undertake new building projects of its own. This model can work for institutional investors seeking a diversified, longterm investment in a neighborhood’s growth potential.
To unlock vacant lots or industrial brownfields for major employers, local government can play a lead role. It can purchase properties, consolidate site control, and undertake environmental remediation. Foundations can act as impact investors or guarantors.
Forming a REIT ensures that residents benefit from the public expenditures. It can own the assembled land or, at a later stage, owning the developed assets. This model works for investors seeking the security of public sector co-sponsors.
Where new development is a foregone conclusion, developers may be interested in reverse-engineering a REIT into the project in lieu of conventional Community Benefits Agreements. A portion of revenues could finance innovative home ownership features or subsidize the preservation of an adjacent, existing portfolio of properties. This approach can be relevant to institutional investors who focus on real estate development and who encounter the challenges of addressing resident concerns about displacement.
For areas held back by speculation of anticipated price movements.
For neighborhoods where major revitalization is underway.
Catalyze & Capitalize (C2) Defend & Develop (D2)
Prototype Portfolios
In Six Cities Nationwide
In each of these locations, we have worked with local partners to design a strategy for a Neighborhood REIT that includes a large collection of assets -- most more than forty acres in size. In addition, each is being customized to feature distinct advantages designed to attract institutional investors.
Adjacent to a high speed rail line, an association of property owners is considering:
• Exchanging their properties for shares in a Neighborhood REIT structure
• Leveraging state funding that has been allocated for infrastructure improvements.
• Creating a local development authority
• Ground leasing the site for mixed-income development and workforce housing
In an historic Southside neighborhood, a local community organization envisions:
• Acquiring a revenue generating affordable housing inventory
• Investing in university-led market rate development nearby
• Bundling its holdings with public lands for future development.
• Mobilizing local investors to initiate the REIT structure.
I-375 / Black Bottom Honolulu Kamehameha Schools
The US DOT is dismantling a freeway that ran through the former Black Bottom Neighborhood, creating an opportunity for redevelopment. A public/philanthropic partnership would like to:
• Create a governance structure to guide the redevelopment
• Create a Neighborhood REIT to allow residents to own shares
• Grant shares to descendants of the original displaced residents
• Acquire and preserve neighboring workforce housing
One of Hawaii’s largest property owners has designated a major site along a new transit line for a major mixed-use development. They could: Buy & Build (B2)
• Sell ground lease shares to residents, with granted shares for Native Hawaiians
• Leverage the social benefit to obtain special U.S. DOT financing
• Obtain a designation by the Hawaii Community Development Authority to facilitate development
• Provide an attractive investment opportunity for mainland investors hoping to avoid public resistance
Catalyze & Capitalize (C2)
Defend & Develop (D2)
Prototype in-development
A major mixed-use commercial and cultural development backed by an international pension fund, is taking shape on the city’s storied waterfront. The partners are exploring:
• Establishing a Neighborhood REIT so that nearby residents can benefit
• Acquiring nearby workforce housing in the nearby South End to be preserved as affordable.
The Mayor’s office created a Site Readiness Fund to buy and remediate a large factory. It is now:
• Working with employers on an end-use redevelopment
• Mobilizing equity investments from local philanthropy
• Seeking federal EPA funds to enhance the surrounding neighborhood
• Designing a Neighborhood REIT for nearby residents
Institutional Investors
Ultimately, Neighborhood REITs must meet the expectations and demands of investors. We therefore brought the idea to eighty senior leaders representing pension funds, sovereign wealth funds, hedge funds, family offices, impact investment funds, and some of the world’s largest institutional investment firms. We also approached major real estate development firms with their own in-house funds. In a series of interviews, we solicited candid reactions.
There was broad consensus that the idea contains a sound investment thesis: Neighborhood REITs could enhance profitability and mitigate risk by consolidating many assets into neighborhood portfolios capable of absorbing substantial capital. By turning residents into vested shareholders, these vehicles can avert costly conflicts and reputational damage. The direct financial benefits to low-income residents can unlock public and philanthropic resources that — but-for the community ownership narrative — would be untapped. For investors specifically focused on expanding workforce housing supplies, Neighborhood REITs can encase these assets in a diverse portfolio, helping to even out overall returns.
We asked each investor what it would it take for them to capitalize Neighborhood REITs without overwhelming resident objectives for affordability and stabilization. Across the board, they cited three conditions to be met: first, each local REIT must be set up in advance, with an independent infrastructure for aggregating resident investors that is insulated from the institutions; second, to cover the administrative costs of a REIT, there should be enough of these entities to create economies of scale; and third, to expedite capital deployment, the investor would need to pre-define a set of risk and return guidelines, or a “buy box.”
Several investors recommended we study fund structures they had already created. We met, for example, with two Blackstone portfolio companies focused on affordable housing in the United States and Great Britain. Each act as a general partner to Blackstone, which covers operating expenses, provides capital, and defines governing terms for transactions. KKR shared its Ownership Works model, through which it invests equity in growing businesses that have committed to employee stock ownership plans. An independent nonprofit identifies companies and helps establish its employee ownership structure. KKR then matches institutional investors — including KKR itself — with the businesses.
Interviews with investors were conducted in partnership with the Real Estate Executive Council, Ernst & Young, the National Association of REITs (Nareit), and Oxford University’s Said School Programme on Real Estate Investment.
A few investors worked closely with us on our early financial models to ensure that potential sites were viable and that scalability was built in from the outset. Although the idea is flexible enough to be adapted to different market conditions, execution at scale requires consistency. On that score, we resolved that each entity would be public, non-traded REIT that meets uniform operating standards, performance criteria, and expectations about exit cap rates. This uniformity would not only facilitate large capital deployments across many locations; it would also permit the bundling, securitizing, and sell of Neighborhood REITs, creating an institution grade “asset class.”
While it was important to stay focused on scale, investors also emphasized the need for a staged rollout. It would simply make good sense to start with a smaller set of Neighborhood REITs that could ultimately be rolled up to a larger fund. This first round would give us time to refine the model, gain practical expertise and informed instincts, cultivate competent operating partners, develop services for resident investors, and socialize the idea in the field. It would also allow for the first generation of Neighborhood REITs to season and mature, yielding actual investor returns and measurably demonstrating the transformative potential for low-income families.
Engaging Small Dollar Investors
Many investor questions focused on the local structures that will be created to aggregate and service small dollar investors, and the mechanics of their involvement:
• Each site can customize its resident share classes for different groups: building tenants, area residents, local merchants, etc.
• Some sites are exploring “birthright shares” granted to local residents or “restitution shares” for the descendants of families displaced by freeway construction.
• Share sales can be integrated into trusted community-based financial education and coaching programs.
• In communities where residents need time to understand the system, introductory shares can be granted, or a block of shares held for later distribution.
• Through partnerships with foundations and CDFIs, resident shares can be multiplied, protected against downside losses, or offered through pre-purchases.
• Alternatively, profits can be held in a “Community Benefits Trust” and made available for home ownership programs, microlending, or local projects.
Public Policy: Creating Predictability
Although Neighborhood REITs are a fundamentally market-oriented strategy, they can benefit enormously from conducive public policy. And since they can achieve social objectives around economic mobility and household wealth building, it is in the public interest that they succeed. With that in mind, we worked with federal, state, and local government — as well as policy institutes like the Brookings Institution, Urban Institute, and Aspen Institute to envision a multi-level policy framework supportive of these entities.
Locally, we are exploring the formation of a joint-powers authority — or similar structure — to enhance the performance of each neighborhood REIT. This structure could possess condemnation, appropriation, and acquisition authority or the ability to make land grants or recapitalize publiclyowned real estate. It could hold jurisdiction over zoning, approvals, and entitlements; create tax increment financing districts; or undertake bond financing. As a coordinating body, it can align and sequence funding from different sectors, a critical function one of our team members describes as “pace layering.” It could sit outside of government, but with a mayoral or county appointee.
President Biden’s Special Advisor for Housing and Urban Policy convened a White House Interagency Policy Committee to help us identify federal “levers” for Neighborhood REITs. The Department of Transportation, for example, is dismantling freeways in twenty-two locations, creating swaths of land that could comprise Neighborhood REITs. Housing and Urban Development is converting large public housing inventories to private ownership. These, too, could that comprise a REIT. Even with no overarching legislative action, a White House Domestic Policy Council can package these resources for formative Neighborhood REITs.
Initially, we assumed that any legislation around Neighborhood REITs would be untenable at the present time, but we have encountered a different view. Our work is being championed by Cecilia Munoz and John Bridgeland, the former Domestic Policy Council directors for the Barack Obama and George W. Bush presidential administrations, respectively. They see the idea as a promising “moonshot,” an ambitious vision of an inclusive American ownership society that both conservatives and liberals can back. They have begun introducing us to their influential networks of current and former legislators, cabinet members, governors, and private sector leaders.
We have consulted with mayors’ offices and planning directors in Boston, Chicago, Cleveland, Detroit, Fresno, Honolulu, Miami, Milwaukee, and San Bernardino. We also presented to the Mayors Institute on City Design which is exploring community real estate ownership with mayors of Charleston, South Carolina; College Park, Maryland; Duluth, Minnesota; Madison, Wisconsin; Providence, Rhode Island; Richmond, Virginia; Salisbury, Maryland, and Youngstown, Ohio.
President Biden’s Special Advisor on Housing and Urban Policy facilitated these White House Interagency Policy Committee (IPC) sessions. The group is comprised of ten agencies: Treasury, Commerce, Securities and Exchange Commission, Housing and Urban Development, Department of Transportation, Department of Energy, Small Business Administration, National Endowment for the Arts, Environmental Protection Agency, and Consumer Financial Protection Agency.
We are also working closely with the National Association of REITs (Nareit). Nareit is dedicated to the ongoing evolution of the REIT as a financial instrument and its fulfillment of its legislated purpose: the distribution of ownership opportunities in real estate. Its leadership is especially committed to helping us model a Neighborhood REIT in Hawaii. State legislators there, concerned that outside investors are overdeveloping precious land and excluding residents from the benefits, are contemplating the elimination of state tax benefits to REIT’s. Nareit has introduced us to their members and is building interest in it as a new asset class that could be recognized in statute.
With this growing base of constituencies, a national policy for Neighborhood REITs no longer feels out of reach. One practical opportunity is to frame it as a revision of the bipartisan Opportunity Zones legislation of 2017. As designed, Opportunity Zones used tax incentives to attract investor capital to disinvested areas; but the policy is widely criticized for failing to distribute financial benefits to zone residents. It is not hard to imagine the legislation being re-authorized with augmented advantages — perhaps including debt and equity, in addition to tax breaks — for investors whose zones have companion Neighborhood REITs.
Launching the Enterprise
We now have what we need to begin envisioning a national enterprise structure that can support the formation of Neighborhood REITs and capitalize them at scale. To center our emphasis on shared prosperity, we are calling it “Opes,” the Latin word for abundance. This enterprise would be comprised of three inter-related entities.
First, a not-for-profit would use philanthropic and public dollars to lay the groundwork for each Neighborhood REIT. It can strengthen the local organizations that will set up each freestanding REIT. It can support early planning and market analysis. It can engage government partners to help with approvals, entitlements, site remediation, land assemblage, or infrastructure improvements. And it can be instrumental in building a base of resident supporters and eventual shareholders. The aim is to mobilize philanthropic or public dollars wherever appropriate to de-risk the project or offset its early costs.
Once a prospective Neighborhood REIT is deemed viable, the second entity, an operating company, would act as its co-sponsor and formally incorporate it. The OpCo would also externally manage the Neighborhood REITs according to uniform standards. Building on systems piloted at Nico, it would provide a technology platform and a suite of shared back-office functions for the REITs, helping with financial accounting, regulatory reporting, and asset management. It would also operate a customer relations management system for each REIT that tracks data on its resident investors and facilitates and aggregates their share transactions.
And third, a property company would be the general partner (GP) fund charged with deploying investment dollars to the individual Neighborhood REITs according to the conditions of the institutional investor. This PropCo would utilize a pledge structure enabling investors to contribute capital on a deal-by-deal basis, maintaining control over investment decisions, and reserving the right to opt out of individual Neighborhood REITs. We currently envision ramping up this fund by entering into a co-creative partnership with a sole investor. However, the structure can also serve a consortium of institutional investors, like KKR’s Ownership Works.
The not-for-profit entity already exists in placeholder form. For fifteen years, the Emerging Markets Development Corporation (EMDC), founded by one of our team, organized community groups to attract new bank branches and supermarkets to their neighborhoods. A companion for-profit, Emerging Markets, Inc., then helped specific financial institutions and supermarket operators to open the locations. Through a “contract hybrid” legal structure, the entities operated with interlocking staff and shared strategy while maintaining firewalls between philanthropic and fee-based revenues. We held EMDC in a quasi-dormant state but re-activated it last with $1 million in foundation grants for planning prototype Neighborhood REIT sites. Our plan is to rename and relaunch it this year.
These three inter-related entities are summarized below along with our objectives for putting them in motion. Taken together, we refer to this structure as our NotCo/OpCo/PropCo model.
NotCo (Not-for Profit 501(c)3)
• Name: Opes Neighborhood Partners
• Function: mobilizes philanthropic dollars as 501(c)(3) intermediary
• Objective: Secure $3-5 million in philanthropic grant funding to support pre-launch technical assistance for local partners, provide thought leadership around Neighborhood REITs, engage in policy development, and contribute to field building. It can help with the entity formation, SEC application, and the construction of local authorities or governance structures that help ensure success. This component helps bridge gaps that are not typically covered by for-profit enterprises and focuses on community impact and support.
OpCo (Operating Company)
• Name: Opes Real Estate Partners, Inc.
• Function: Focuses on investment, asset management, and technology.
• Objective: Utilize $5 million to build technology and a team to externally manage the Real Estate Investment Trusts (REITs) and act as a REIT sponsor. It can provide shared back-office functions, including financial accounting and regulatory reporting for the Neighborhood REITs; and a customer relations management platform that facilitates online transactions for resident investors. It is crucial for the operational and profit-generating activities of the overall structure.
PropCo (Property Company)
• Name: Opes GP Fund I (GP Pledge Fund)
• Function: Acts as a general partner (GP) fund with a pledge structure.
• Objective: Raise $30 million in pledged commitments, allowing investors to veto or opt out of deals. To begin, these funds will be used to seed three Neighborhood REITs with $10 million each in GP capital. The aim is to leverage this initial capital to attract an additional $40-90 million per Neighborhood REIT from local and national limited partner (LP) investors.
An Idea Whose Time Has Come
With this white paper, we aim to do more than make a business case for Neighborhood REITs as an investment strategy. We hope to convey the societal significance of the idea for the times in which we live. At a local level, the inability to align interests between investors and residents transforms neighborhoods into battlegrounds for displacement and anti-development resentments. There are clear winners and losers, and no one feels good about it. What’s more, these localized conflicts are manifestations of an even larger breach, a widening gap between rich and poor that exacerbates racial disparities. It signals a diminishing middle class and a failure to achieve the distributive ownership society envisioned by our nation’s founders.
Outspoken voices on each side depict these conflicts as intractable. But across the country, we have been encouraged to find that a different view quietly predominates. Residents and community leaders, mayors and city councilmembers, government agency heads, real estate developers, and investors of all kinds have demonstrated a willingness to view the structural problem — lack of alignment — as the enemy and not the other side. They are at least open to the relinquishment of a scarcity mindset and the acceptance instead of a more abundant outlook based on shared economic growth. They want to help translate the idea of Neighborhood REITs into a new asset class for investors, public policies that span free market economics and equity, and a wholesale rethinking of the community development and affordable housing fields.
With this groundswell of support, we have a critical mass of local partners, prospective investors, and seasoned advisors to move forward with the creation of this enterprise. It is an idea whose time has come, and we hope to continue working with you towards its ultimate realization.
Leadership Team
Elwood Hopkins, President, Emerging Markets, Inc.
Max Levine, President, Nico
Taidgh McClory, President, THM Advisors
Select National Advisors and Contributors
John Bridgeland, Former Domestic Policy Council Director for President George W. Bush and Executive Chairman, Office of American Possibilities
Paula Campbell Roberts, Head of Global Consumer Real Estate Macro and Thematic Investing, KKR
Marco D’Arienzo, Managing Director, Blackstone Real Estate
Bob Graziano, Vice Chairman, the JPMorgan Private Bank
Victor Hoskins, CEO of the Fairfax County Economic Development Authority
A.J. Jackson, President, LEO Impact Capital, JBG Smith
L. Duane Jackson, Chair of Real Estate and Strategic Initiatives, Massachusetts Port Authority (former)
Tammy Jones, CEO, Basis Investment Group
Spencer Levy, Global Chief Client Officer and Senior Economic Advisor for CBRE
Amy Liu, former President of the Brookings Institution
Nnenna Lynch, President of Xylem Projects and Board Member, Blackstone Mortgage Trust
Kathleen McCarthy, Global Co-Head, Blackstone Real Estate
Mark McGowan, Head of Development for Boston, Oxford Properties Group
Ken McIntyre, Chief Executive Officer of the Real Estate Executive Council (REEC)
Cecilia Munoz, Former Domestic Policy Council Director for President Barack Obama and Co-Chair, Office of Americaan Possibilities
Shariff Pitts, Managing Director, Kayne Anderson Real Estate Ventures
Erika Poethig, President Biden’s Senior Advisor for Housing and Urban Policy (former) and Executive Vice President, Civic Committee and Commecial Club of Chicago
Joe Ritchie, Managing Director, Tishman Speyer
Bill Schwab, Founder of LCI Real Estate Investments former Global Heal of Real Estate for Abu Dhabi Investment Authority (ADIA)
Amanda Strong, Director of Asset Management for MITIMCo, the Massachusetts Institute of Technology Investment Management Company
Kirk Sykes, Managing Director, Accordia Partners
Stephen A. Wechsler, President and CEO, National Association of REITs
Steve Weikel, Industry Chair of the Real Estate Technology HUB, MIT Center for Real Estate
