The Life Cycle of Place-Based Investments and CCM’s Role
By Community Capital Management, Co-Portfolio Manager (Impact Fixed Income) of the AdvisorShares Global Echo ETF (NYSE Arca: GIVE)
A few reasons why we think this is significant: (1) we get asked all the time how we are involved in place-based investments; (2) many investors still don’t understand the stages involved in place-based investing; and (3) we are always looking to assist our clients and prospects with more information so they can make informed decisions.
So let’s review. While each place-based investment opportunity has unique characteristics, there are certain themes that tend to be repeated in the life cycles and evolution of the investments that end up in CCM’s client portfolios:
- First, the private or public sector funds and builds a property for market-related use that is appropriate at time of construction.
- Second, with the passage of time and changes in neighborhoods and local economies, a property’s original purpose is no longer relevant or economically viable.
- Third, subsequent neglect and sometimes abandonment create an eyesore, safety hazard and contribute to decline in property values and become part of a negative spiral for communities and residents.
- Fourth, government planners and foundation-supported entities seek to craft a repurpose and rehabilitation strategy that will return property to fuller use and be part of overall revitalization goals.
- Fifth, a winning plan emerges and the scramble to put together financing packages begins. Public agencies and/or foundations spend money to create an opportunity that will attract private capital.
- Sixth, construction and rehab occur, frequently with grants, program-related investments (PRIs) or foundation support for non-profit partners, available subsidies are drawn and a property is ready to return to the market with a new purpose. Banks and construction lenders will play a part.
- Seventh, a permanent financing takeout whereby a patient capital long-term investor will own a mortgage or similar investment instrument on the reincarnated property.