Wharton Alumni True Impact Focus and Wharton WISE Case Study on Real Estate Impact Investments

Real estate investments in targeted urban and rural communities in the United States are increasingly seen as attractive opportunities for achieving positive and sustainable social impact outcomes and attractive risk-adjusted returns. 

Some examples include (1) brownfield revitalization projects in collaboration with the U.S. Environmental Protection Agency (EPA), (2) investments in designated Opportunity Zones created by the Tax Cuts and Jobs Act of 2017, and (3) Public-Private Partnerships used to create sustainable economic growth within low- income census tracts.

In collaboration with a team of students in the Wharton Social Impact Initiative (WSII) WISE program, the Wharton True Impact Focus (WHATIFMS) team undertook a project to assess the financial viability and positive social impact of an innovative real estate project: an urban redevelopment venture in the Mechanicsville neighborhood of Atlanta, GA.

For the project, the WISE student Fellows assisted WHATIFMS in further developing Mechanicsville Partners’ impact assessment and discussed possible approaches for building a model for replication and impact strategy within real estate investments. According to Sherryl Kuhlman, Managing Director of WSII, “Having our WISE Fellows work on projects like Mechanicsville is a chance to blend educational opportunity with meaningful impact. We’re delighted to have been a part in connecting Wharton alums to our passionate students.” Serge Devieux, WHATIFMS Principal and a 20-year veteran of the World Bank and IFC said, “Our focus on impact combined with the rigorous finance skills we acquired at Wharton allowed us to analyze Mechanicsville’s critical success factors. We aim to apply this winning combination to similar sites in the future.”

Mechanicsville Partners, LLC is a for-profit social entrepreneurship that invested in a group of brownfield properties in Mechanicsville, an “economically challenged” neighborhood in transition. The company was founded by Wharton alumnus, Ric Geyer, in July 2015. According to Ric, “Our Mission, as my grandmother would say, is to, ‘Always leave a place better off than when you found it.’ Our strategy is to enlist the community in our success. I think our neighbors would say we’ve done both.”

In analyzing the social entrepreneurship approach by Mechanicsville Partners, the team identified key factors evident in this case: 

(1)   Real estate investments by anchor institutions (hospitals, universities, cultural institutions, etc.) stimulate community and economic development;

(2)   Investments that are coupled with arts and cultural programming can have a compounding impact on communities;

(3)   Local community partnerships are essential. In Mechanicsville’s case, partners include the EPA, Atlanta Workforce Development Agency, and Mechanicsville Civic Association.

The team also drafted several assessment tools for the Mechanicsville site to test out. The WHATIFMS team will be exploring the applicability of these tools for new projects (or expansion of existing projects):

(1)   Vulnerable population with promise;

(2)   Strong real estate indicators;

(3)   Promising economic trends and “secret sauce” – region and project specific metrics.

The MBA and undergraduate students working on the project also worked on the identification and analysis of risks and mitigation strategies, application of impact logic models, impact return-risk analysis, and other site-specific data.

WHATIFMS is a partnership of Wharton alumni who are interested in identifying investment opportunities that achieve quantifiable and sustainable social impact while delivering attractive risk/adjusted returns. Real estate projects, such as workforce housing, in both urban and rural USA are of significant interest to WHATIFMS. The team is also currently looking to apply the methodology described above for projects within several cities in Georgia and in rural Alabama. 

According to Steve Marks, WHATIFMS Principal and Co-Manager and an investment professional with more than 30 years of experience, “We are performing due diligence on social impact opportunities in the Southeast in partnership with state and local government, the US EPA, stakeholders in the communities, and well-respected developers. And to measure the transformation of brownfield sites into viable sustainable and attractive investments around workforce housing, entrepreneurship, workforce development, and water and outdoor destinations. In the hopes of achieving meaningful population growth and job creation in rural communities going through a transition and addressing an important housing issue for hospitality industry employees.”

About the Wharton Social Impact Initiative

Wharton Social Impact Initiative (WSII) advances knowledge at the intersection of business and social impact with data, analytics, and innovation. Our cutting-edge research and distinctive training opportunities provide students and professionals the tools to create business-driven solutions for a better world. Visit socialimpact.wharton.upenn.edu to learn more.

For more information, please contact Steve Marks, Principal and Co-Manager, WHATIFMS at steve.marks@whatifcorp.com.

Source: Wharton Alumni True Impact Focus


Categories: Finance, Real Estate Investments

Tags: Impact Investments, Real Estate Investments, Wharton Alumni