The Steinbridge Group, a residential real estate investment firm, is making a $100 million capital commitment to Historically Black Colleges & Universities (HBCUs) today.
Through its investment partnerships, Steinbridge will produce attainable housing for HBCUs in the nation’s fastest growing cities. The Steinbridge Group’s commitment addresses the funding inequities faced by HBCUs, which on average receive 30% less funding than their predominantly white counterparts, and have endowments 1/10 the size of majority institutions.
The Biden Administration recently re-emphasized these funding inequities in a joint letter sent by Secretary of Education Miguel Cardona and Secretary of Agriculture Tom Vilsack to HBCU state governors. The letter noted that HBCUs have “not been able to advance in ways that are on par” with other land-grant institutions in those states “in large part due to unbalanced funding.” Forbes investigated this vast underfunding in 2022.
The $100 million investment is one of the Steinbridge Group’s most ambitious initiatives. The firm searches for underutilized assets with a significant investment potential. When provided with the right combination of capital and expertise, Steinbridge works toward forging a path to new wealth creation. To make it work, Steinbridge relies on community partnerships with mission-oriented local institutions that share the firm’s goal to have impact — HBCUs are just this type of institution.
In addition to the $100 million investment, Steinbridge plans to collaborate with HBCUs to launch programs for students to accelerate their path to homeownership.
According to Steinbridge Founder & CEO Tawan Davis, “The company’s goal is to demonstrate that private capital can be used to do tremendous good and still make a good return. While the model opens the door for Steinbridge to partner alongside an array of local groups like community hospitals, churches, or local nonprofits, HBCUs stood out as clear investment pursuits.”
Black colleges have always been the backbone of the Black middle class, they drive population growth and spur regional economic activity. As Davis shared, “Many of them have land, untapped assets, workforces, and degree programs that can be financially leveraged.” In the South, where most are located, HBCUs are positioned to capitalize on increased wealth, migration to the South, and a growing demand for middle-class accessible housing. Serving the community is deeply embedded in the ethos of HBCU culture.
Supporting Black communities and organizations is personal to CEO Davis, who grew up in Oregon, but he traces his family ancestry to sharecroppers who worked in Arkansas in the run-up to through the Great Depression before relocating to his hometown of Portland. As a teenager, Davis’s family relied on a Section 8 housing voucher to rent a large home considered one of the better dwellings in the neighborhood. That home’s previous owner employed his grandmother as a maid and allowed the family to take up the place after her children became adults. Raised by a single mother, strong women encircled Davis’s youth. As he shared, “It was these inspiring women who introduced him to real estate’s power to change families and communities for the better, as well as, set young people up for success.”
Like several of his mentors, Davis imagined he would follow in the footsteps of Martin Luther King, Jr. and attend historically Black Morehouse College in Atlanta, Georgia. Ultimately, Georgetown University offered the scholarship money necessary to attend. After Georgetown, he earned a degree in sociology from the University of Oxford in London and completed an MBA at Harvard Business School. “From there, several professional paths opened up,” said Davis. “However, I concluded that we ultimately live in a capital-driven society. Many of the persistent challenges in America are rooted in an ever-widening wealth gap and I believe that building a strong, profitable, independent business is one of the most direct ways to address that.”
But why HBCUs? The United States has 105 HBCUs, public and private institutions. Many HBCUs are situated near transitioning urban neighborhoods, and own land, properties, or buildings that are currently under used. Steinbridge Group aims to activate these property assets, creating new sources of income for HBCUs. According to Davis, “the HBCU investments will prioritize partner ownership. HBCUs are expected to keep meaningful ownership of the project and retain the flexibility to be sensitive to student and local needs.” He added, “To that end, some HBCUs might employ it as an incentive to attract the best workforce. Others may desire to build affordable housing opportunities. The end vision is for colleges to keep tangible ownership of projects, collect revenue, and generate long-term value for their stakeholders.”
The Steinbridge Group’s uses the following approach to deciding where to invest:
- Identify major metros with considerable job growth. Research suggests that two-thirds of American jobs are created by and around the nation’s top 15 to 20 metropolitan areas. The job and population surge in these areas creates housing dislocations sending rents and home prices soaring for residents.
- Highlight the spots within these metro areas that are experiencing rapid change. To the extent that current residents face being displaced, providing a bridge to affordability for both renters and potential homeowners.
- Focus on middle-class families who are burdened with increased housing costs.
Make individual investment decisions.
- According to Davis, “I’d like to figure out a way to build a bridge to transition [in neighborhoods surrounding HBCUs]. I don’t know if Steinbridge has the resources to stop gentrification, but we can build a bridge to transition by allowing the people who are in the neighborhoods to participate and stay if they’d like, and then own a home in that very same neighborhood.”
Read the full article at Forbes.