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Nicholas,
Earlier this month, I was honored to represent the Multifamily Impact Council at the United States Department of Treasury’s Freedman’s Bank Forum in Washington, DC. Hosted by Vice President Kamala Harris and Treasury Secretary Janet Yellen, the forum focused on solutions to increase economic opportunity for people of color and address factors that drive this country’s racial wealth divide.
While participating in a breakout session with HUD Deputy Secretary Adrienne Todman, I was struck by the commitment, great ideas, and passion of my fellow participants and energized by the potential for the multifamily industry to be an agent of positive change in this area.
All of us in multifamily impact investing must make an intentional and transparent commitment to diversity and inclusion for our industry to reach its full potential. That’s why diversity, equity, and inclusion is one of the Council’s seven principles and the focus of this issue of our newsletter.
We start with a piece by Hilary Provinse, EVP and Head of Mortgage Banking at Berkadia, who shares her reflections on Berkadia’s third annual Women in Commercial Real Estate Conference. Then we feature an interview with Langdon Park Capital CEO Malcolm Johnson about diversity and inclusion in real estate finance.
As Malcolm points out, diversity encompasses everyone, from our teams to our customers and the people who live in our communities. Ensuring that our industry delivers in this area will require of us to remain focused on supporting and including diverse people, perspectives, and voices.
Thanks for reading,
Bob Simpson
President, Multifamily Impact Council
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Hilary Provinse: Reflecting on Berkadia’s Women in Commercial Real Estate Conference | |
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Hilary Provinse is Executive Vice President, Head of Mortgage Banking and a member of Berkadia’s Management Committee. In this role, Provinse oversees more than 165+ experienced mortgage bankers and their teams located in 50 offices across the country.
Previously, Provinse was Senior Vice President and Head of Customer Engagement at Fannie Mae, where she managed the team who was responsible for all of Fannie Mae’s production activities and customer relationships – overseeing more than $100 billion of production during the course of her tenure. Prior to joining Fannie Mae in 2003, Provinse spent 10 years on Wall Street in investment banking, working for Goldman Sachs & Co. and Bear Stearns & Co. in New York.
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This September, Berkadia hosted its third annual Women in Commercial Real Estate Conference in Park, City, Utah. With the mountains as our backdrop, Berkadia led the conversation with more than 100 executive women in CRE to talk industry trends, market conditions and how we can collectively move the needle on increasing female representation in CRE. We checked in with Hilary Provinse, Berkadia’s EVP and Head of Mortgage Banking, to hear some of her biggest takeaways and insights from the conference, and why this annual forum is key to driving change in the industry. | |
What were some of the most inspiring conversations for you? | |
We shared insights, made new connections and strengthened relationships with clients and partners we’ve known for years. A recurring theme that came up in the panel discussions as well as from our guest speakers, Stephanie Linnartz, President, Marriott International, Inc and Shannon Bahrke Happe, Olympian and Entrepreneur, was to believe in yourself and be willing to take risks. Stephanie spoke about the impact COVID-19 had on the hospitality industry and how leading with empathy was a gamechanger for Marriott and its employees. Particularly in times of market disruption, such as today, we need to listen to our clients, our teams and lead with our authentic selves. | |
What were the key takeaways about the CRE market today? | |
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Considering the volatility in the CRE market with inflation, rising interest rates and disruptions to the capital markets, it was an important time to share insights about market conditions. While the investors on our panels all reported property operations/NOI growth at record levels over the past 12 months, they expressed concern that these trends are slowing. A poll of the audience showed the strong majority would be net buyers over the next 12 months, but in the short-term they were cautious. Panelists agreed that there was still ample capital and institutional demand for multifamily investments and attendees with diversified portfolios shared that they were underweighted in multifamily.
Several lenders shared that the industry needs to keep an eye on technology, particularly as it relates to future electronic vehicle legislation and our existing infrastructure. From a Capital Markets liquidity standpoint, there was some concern about bank lending, particularly in the new construction space. The GSE and Life Company Lenders in attendance shared that they were active in the marketplace and have capital to lend but are underwriting cautiously.
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Was there a moment or an insight that was especially inspiring for you? | |
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Aside from spending time with some of the most influential women in CRE, it’s not every day you get to meet an Olympian and hold an Olympic medal! To hear firsthand from Shannon Bahrke Happe that she felt paralyzed by imposter syndrome when she was standing at the gates of the 2002 Winter Olympics, resonated with me and several other colleagues around me.
As women, we tend to question ourselves at different points of our careers and wonder if we’re the right person for the job. That moment when we decide to trust our capabilities and lean into the challenges, we are able to step into our true selves as leaders.
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Is there a particular piece of advice you’d give to a woman considering a career in CRE? | |
I’d encourage women considering a career in CRE to nurture and grow their networks and get involved with local groups to build your knowledge of the industry. Focus on making genuine connections and seek them out for advice and help when you are facing change. Take the leap – a career in CRE is fulfilling and exciting! | |
Q&A: Malcolm Johnson, Langdon Park Capital | |
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Malcolm Johnson is CEO of Langdon Park Capital, a real estate investment management company that focuses on creating lasting social impact, while generating value and strong financial returns for investors. Previously, he was a Director in JPMorgan’s Commercial Real Estate group, where he led the firm’s efforts on a new platform that deployed equity into affordable and workforce housing projects in markets across the country.
Johnson serves on the Advisory Board for the Fitzgerald Institute for Real Estate at the University of Notre Dame, Sustaining Board for the UCLA Ziman Center for Real Estate, Board of Trustees for the Marlborough School, and Corporate Advisory Board for The Brotherhood Crusade, a non-profit organization supporting low-income South Los Angeles residents. Johnson received his Masters in Business Administration from the Tepper School of Business at Carnegie Mellon University and his Bachelor of Business Administration from the University of Notre Dame Mendoza College of Business.
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Why is it important for the industry to focus on diversity and inclusion? | |
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For the same reason that every industry that touches various parts of the economy should be focused on the perspective of diverse stakeholders. And that's not just leadership teams, which are obviously important, but those are end users and consumers. In our space, those end users and consumers are the families who live and work and shop in the communities where we own properties.
If you think about how real estate affects every part of a working economy, it's where people live, it's where people go to school, it's the places where we shop for groceries. All of those spaces are inhabited by a diverse array of families and individuals. And so, we have to think of how to create the best spaces. If you are trying to get to the best investment outcome, you’ve got to have a diverse perspective. And that includes all stakeholders.
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How do you take diversity and inclusion into consideration when building your team? | |
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We are very intentional about that. Like every other sector, what gets measured gets improved. Where you focus your time, resources and energy is where you ultimately have the best results. We’re intentional around creating a diverse perspective. And naturally, the best way to have a diverse perspective is to have diverse voices, eyes and ears with which to make better investment decisions.
Because I have been a Black professional in this business for 17 years, and there are a relatively small number of senior professionals in our business who are diverse, I've got unique access to the best and brightest diverse professionals in our space. We had a distinct advantage in building our team with a group of extremely talented and diverse professionals. And we think that leads to better investment outcomes, particularly in the submarkets where we are making decisions on where to allocate capital and how to operate those assets.
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And how do you approach ensuring your team members feel included? | |
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You have to make people feel included, and that manifests itself in a number of ways. I try to do a good job of listening and empowering our team members to articulate why we should make a certain decision and why we should work with certain partners.
We start every team meeting with a health and wellness check-in. I never did that at either of the banks where I worked because at at those organizations it wasn’t a priority for team members talk about that in the context of work. At Langdon Park Capital, I'm constantly reminding the team that nothing works well if we aren't health, or if we don't feel good about the work we're doing. So I encourage our team to verbalize that. Hopefully that's creating a sense of, “Our CEO is concerned about my family and my health. I'm encouraged to take time off to recharge my battery.”
Those things are important. And it has to be part of the culture. Otherwise, what will happen is – and this is going to be much more prevalent as we move to a more permanent hybrid work scenario – that every team member who feels like, “Well, I'm just here for the paycheck. The other things that fill me up are outside of work, anyway. I'm happy to go across the street for an extra few thousand dollars because I'm just Zooming into work anyway. I don't see or know my coworkers, and they don’t know me either.”
There needs to be some level of connectivity. You need to feel valued in order to want to do the work that we do.
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What has your experience been as a Black leader in real estate investing? | |
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One of the best experiences I had was starting my career at a large institution, where there were a lot of resources allocated to supporting diverse team members, and not just diverse in terms of race. I joined Bank of America right after graduate school. I didn't know a ton about real estate finance outside of what I learned in class, but that bank made a significant investment in a junior crop of future executives. That created some diversity within the team. I joined a group that had 25-, 30-year industry veterans, and I was a relative newbie.
The other thing that was beneficial to me was that I had very supportive mentors. They weren't all Black, and in fact, most were not Black. But those mentors took a vested interest in me and my success at the bank. I was willing to do my part and work hard, but ultimately, I have to thank a lot of the senior executives that I worked with at my first job in real estate.
That part remains critically important. We've got a relatively senior team of professionals at Langdon Park Capital, but we have always had interns almost continuously since we launched nearly two years ago. We've got an associate with us now who worked in the aerospace industry for a number of years. She did that prior to moving into urban planning. And she happens to be a Latina, born and raised in Inglewood, CA, which is in South LA, a predominantly Latino and Black community just outside Los Angeles. Yes, her life experience is diverse, but she also has professional diversity. She also happens to be our youngest team member, and she's been fantastic. She's helped us with everything from investment committee memos to our marketing materials. And she always views our work through a different lens than what any of our senior team members would have.
Again, that type of diverse perspective, it's so much more important than just, “Let me check the box of getting a person who is fill-in-the-blank race or fill-in-the-blank gender.” You've got to think about how they add value to the team beyond just their X or Y chromosomes, or racial makeup.
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Speaking of other forms of diversity, how does that mindset factor into your hiring decisions? | |
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The very simple answer is you have to be intentional about where you're looking and think about the skill set as opposed to the technical skills. Clearly, the technical skills are important. But I would argue that technical skills are easier to hire for than the skill set.
At our company, a Day One hire was our Head of Legal and Compliance. He's been an amazing team member, partner and thought leader. He also happens to have a background as a CPA. And he moved from his first career working for a big five accounting firm to big law as an associate working in M&A. From there, he went into the private equity space. So his depth of knowledge around accounting, law and capital markets advisory has helped us in every way, despite the fact that at the beginning his real estate experience was limited. But clearly, he's smart enough to go get the real estate technical skills.
Our Head of Asset Management, in addition to a 20-plus-year career working for some of the largest real estate firms in the country, has run nonprofits and has been a tremendous philanthropist. She brings the perspective of someone who thinks about community, alongside managing properties and reporting to investors. But again, I was very intentional about focusing on the skill set right alongside technical skills, which we know will shift anyway. As the world changes, as business changes, you're going to have to continue to fine-tune your technical skill set. But the broader perspective that you get when you have a diverse team is a lot more important, especially for what we do and how we think about making investment decisions.
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What’s something you’d like to see the industry do more or less of when it comes to diversity and inclusion? | |
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One of the big ones is shifting the way decisions are made to begin thinking about the stakeholders who make those decisions and how those decisions affect all stakeholders. And I say that coming from large institutions that did a tremendous job of creating an institutional process that allows for very few rogue decision-makers to tank the company. But what is also created when you've got an institutional process doesn't necessarily leave as much room for creativity. It doesn't leave as much room for shifting nimbly when the market shifts.
I consider Langdon Park Capital a fledging institution. We've got $150 million in AUM, and we are trying to triple that over the next year and a half. But I don't want us to lose the thought process of, “How does this affect the end user?” In our case, that end user is the person who lives in our community. Financial returns are critical. Those have to be demonstrable. We have to have a pathway to create a scalable business. But if you know two investments are very similar, “Why would I choose Langdon Park Capital?” Well, they're building houses for Black and Latino families who work in hospitals and school districts and support a growing economy, and their team is authentic about doing it responsibly.
As an industry, we have to continue to think about broadening the stakeholder perspective and creating a process that is much less rigid when it comes to making investment decisions. When we do that the outcomes will be so much better for all of us. That's the real key. We will get better investment outcomes, better outcomes for the neighborhoods where these properties exist. This is just one part of a much larger solution. But I'm excited to be a part of it.
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What can the industry do to attract more diverse people who are still getting their education or are early in their careers? | |
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The interesting thing about our business is that it is all-encompassing. It is the macro economy all rolled into one — interest rates, job creation, household formation, etc. All of that obviously affects values and real estate and where you make investment decisions. I think what we need to figure out in the industry is how to illustrate how important the macro economy is within the practice of real estate finance. And then we need to do a better job of actually listening to younger students and younger associates around where investment decisions should be made.
They can tell us where the hockey puck is moving. They can tell us where they and their friends like to vacation, how they like to come into the office. They can talk to us about some of the burdens they may have with student loan debt. And that affects how much discretionary income they've got to spend on retail vs how much income they have to pay for rent. But you need that inside of your company.
And the last thing — this is true, not just for real estate, I'd say it's true for finance in general — but today's young professional doesn't necessarily view capitalism for the sake of capitalism as success. Veteran industry executives need to describe how our business affects the overall economy, and why we need diverse perspectives and also talk about how it's important in the grand scheme of things. I don't think you can attract young talent, at least not the type of young talent that you want, if the only focus is around, “Our company needs to make X profit to meet shareholders’ financial expectations.”
We need to be able to talk about how this is affecting the world we all live in, in a positive way. Whether that's sustainable finance or impact investing or preserving and creating more affordable housing. You name it. We need to describe to a younger generation how our business affects all that to get them really excited about coming to join us and provide real solutions.
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