Diversity Conference Discusses SCOTUS Decision, Other Issues

Possibly the largest conference in the nation dedicated to real estate operators and developers of color, the recent 2023 DCRE Diversity in Real Estate Conference in NYC drew 650 in-person and online attendees representing 31 states. Now in its fifth year, the conference has reached new levels of mainstream recognition, with a broad coalition of corporate sponsors from banks to real estate service providers and Fortune 500 corporations. 

The topic of diversity in real estate couldn’t be timelier given the recent Supreme Court decision overturning the constitutionality of affirmative action and its potentially far-reaching implications. Even before the ruling, widespread uneasiness amongst diverse sponsors was already palpable. In the wake of George Floyd’s murder, many corporations and investment firms had committed to funding BIPOC real estate companies to address structural racial inequities. And yet, three years later, many of such commitments have either fallen short of original goals or failed to materialize. So, the tone of the conference was one of impatience and urgency.

DCRE founder and social visionary Adeola Adejobi, CEO of the Avant Garde Network (AGN), knows how to set a stage. Panels covering a diverse array of topics, from how to structure JVs to raising an investment fund to spotting development opportunities in the current market were not only relevant, but stacked by industry veterans, all but guaranteeing an impactful exchange of ideas.

 Several themes emerged, but the state of corporate support for professionals of colors was top of mind. Panelists, including Ohio Congresswoman Joyce Beatty, former chair of the Congressional Black Caucus, framed the gravity of the current landscape. “Look at this Supreme Court case and what we are dealing with based on race and affirmative action. If you think it’s just about education…It’s going to do the same thing to construction…it’s coming down to corporate jobs, so for the DEI folks trying to make entrepreneurs like John Rogers or Robert Blackwell or Otto Beatty III, they want to cut that out.” Tiara Henderson, Head of CRE Diverse and Women’s Segments at Wells Fargo, echoed the sentiment. “There were a lot of pledges in 2020. And now, we see over the last three months all these wonderful, smart, bright, innovative mostly black women have been booted to the side from these DEI jobs and no one is saying anything. No one is holding those company’s feet to the fire, and I think that is what’s really missing. There are all kinds of experiments about what people do when no one is watching. I feel like these companies and institutions need to know we are watching.” 

Concerns around the current political climate were not strictly limited to corporate responses to the Supreme Court ruling. Kirk Goodrich, President of Monadnock Development also expressed concern around initiatives that treat minorities mainly as low-income renters rather than promoting their long-term economic upliftment. “In NYC, we spent $5 billion or so the last fiscal year given our right to shelter requirements, but very little to help people own homes and even less of a focus on helping people of color become participants as developers. From my perspective, one of the biggest impediments is the laser focus of so-called progressives on seeing black people as tenants and clients and not business owners. They’re happy to spend billions of dollars to warehouse us in shelters, but less excited when Karim or Ed wants a piece of the deal (referring to fellow developers Karim Hudson and Ed Poteat).”

The context for such statements is sobering, especially given a recent study produced by Grove Impact and Initiative for a Competitive Inner City (ICIC) concluding that black and Hispanic developers make up less than 1% of the real estate industry. A political landscape that leaves minorities sandwiched between potential rollbacks of employment, contracting and funding opportunities on one end and problematic paternalistic frameworks on the other creates a dynamic that could not only impede growth in the sector but stimy access to wealth creation.

Despite this, there were several BIPOC developers in attendance who have navigated such challenges and still gone on to build highly successful real estate enterprises. Jim Simmons’ Asland Capital Partners, for example, has invested in over ten thousand multifamily units and one million square feet of commercial square feet. Karim Hudson, CEO of Genesis Companies, has built or acquired 3,700 units across 124 buildings in the NY Tri-State area. And Dawanna Williams’ Dabar Development Partners is currently co-developing 5 World Trade Center, one of NYC’s most publicized projects, in a joint venture with Brookfield, Silverstein Properties, and Omni New York. Far too often, the stories of these modern-day trailblazers go untold. Part of DCRE’s importance lies in ensuring that they are showcased and celebrated, while also creating a conduit for others with similar aspirations to access the valuable insights they can impart.

Unlike other DEI conferences, DCRE is a forum for deal makers looking to impart practical lessons and collaborate in the name of closing bigger transactions while maximizing community impact. A common theme that emerged was the myriad of creative structures operators have utilized to overcome a lack of institutional funding. From low-income housing tax credits to crowdfunding, retail syndications, to seller-financing, the participants demonstrated an unwillingness to let a lack of traditional funding sources dictate their success or failure.

  The other vital role DCRE plays is bridging the gap between BIPOC operators and institutions that are seeking to invest in them. Lack of access to capital remains the most acute roadblock for most diverse entrepreneurs, so hearing directly from large funding sources like Prudential, Wells Fargo, and Starwood Capital about their social impact mandates and investment criteria offered key insights for those seeking funding on new projects. 

For a group accustomed to un-fulfilled promises, it was particularly important to see tangible results from the companies in attendance. Fortunately, several were eager to share. John Lancaster, VP of Emerging Markets Franchise Development for Choice Hotels proudly touted Choice’s long held commitment to increasing minority representation in the hospitality industry. “Choice has had their emerging markets program for 20 years and during that time we have awarded and financially supported over 347 under-represented minority franchises.” Similarly, leaders at JP Morgan summarized several of the bank’s verticals, including affordable housing loan programs, funding provided to CDFIs across the country, and a multi-pronged $30 billion commitment to addresses racial wealth gaps. Lawrence Hammond, SVP of Community Preservation Corporation (CPC), a CDFI, also explained how a deliberate shift in CPC’s organizational priorities had benefited minority sponsors. “This past fiscal year we closed 38 construction loans. Half of those were to black and brown developers.” The Local Initiatives Support Corporation (LISC) launched the Black Economic Development Fund in 2020, a $250 million vehicle providing pre-development, acquisition, and construction loans to black-owned companies. “We have committed nearly $200 million of that capital in 38 projects across the US in 23 different cities,” said Director Emily Harden. TruFund, another CDFI, has made $25 million in equity investments in developers to fund working capital needs, offering what is often the most elusive source of funding to procure. While programs of this size won’t solve level the economic playing field, they can certainly provide a model for others to replicate and scale.

Even with troubling headwinds ahead, the DCRE conference was a clear illustration of the talent, innovation, and fortitude that defines diverse sponsors. The real estate community is fortunate to have an advocate in Ms. Adejobi, creating space for nuanced conversations necessary to ensure that BIPOC entrepreneurs, and the communities they invest in, reach their full economic potential.

Vernon Beckford is CEO of Diversified Lending Solutions