While the top 10% of residents in America own 76% of the nation’s wealth, the bottom 50% own just 1%. African-Americans and other minorities have less than seven times the average wealth of their white counterparts. A home is the largest asset for the average American family, representing about 30% of their net worth. Home ownership is, therefore one of the most effective means to build wealth and close the wealth gap. Black-owned residential property developer Steinbridge Group is providing working families with high-quality, affordable housing and empowering them with homeownership opportunities. The real estate firm’s billion-dollar strategy is creating a more just and equitable society by investing in historically underserved communities.
“Over the last 15-25 years America has rediscovered its urban center. Areas previously ignored and underdeveloped are now in high demand – creating domestic emerging markets but pushing many to the wayside. By investing in these areas, we could produce outsized returns for private capital while making a profound impact on families and communities. For us, investment and impact move together,” Tawan Davis, founder and CEO of Steinbridge, said of the transformational potential of his investment strategy.
Growing up in Portland, Oregon, Davis recalls asking his grandmother why everyone else had money and they didn’t. He was raised by a single mother who often worked two jobs to make ends meet around the statistical poverty line. Their widowed neighbor let his mother use a Section 8 voucher to rent her house when she remarried and relocated. That home provided Davis and his sister with home safety through the turbulent 1990s and stability through the regentrification of the early 2000s.
At just 15 years old, Davis first recognized the home ownership problem prevalent in many American cities. He navigated financing challenges and earned his bachelor’s in economics from Georgetown University. He secured a position at Goldman Sachs, identified $2 billion of new investment opportunities while at Prudential Financial and went on to serve as vice president of real estate economic transactions at the New York City Economic Development Corporation. He led, negotiated and executed New York City’s largest land transaction valued at $400 million. After serving as CIO & President of Peebles Corporation, Davis set out to start his own real estate business.
In 2016, Davis started Steinbridge as a commercial office company. He structured and executed over $900 million in office building investments. But before the pandemic could destroy the office sector, Davis realized that offices were not the major growth space for a growing real estate company. He recognized that he could excel in the real estate business while having maximum impact in the residential property sector. Driven by his vision of providing affordable rental homes for lower-income working individuals, he relocated from New York to Philadelphia.
Related stories
“I saw real estate as an opportunity to provide a positive impact, to help people like me walk the path of economic empowerment. Some people are in love with architecture and design and the built environment. For me, it was really the opportunity to bring finance and job and wealth creation together [to] create economic opportunity,” Davis explained.
In Philadelphia, Davis saw that people were increasingly raising their families in rentals and renting for much longer periods. The steep increase in property values over the past two decades meant that people weren’t following the conventional trajectory of marriage, homeownership, and starting a family. It was the most substantial decline in homeownership rates since the Great Depression. Regrettably, the available rental housing within the market mostly consisted of inadequate, cramped, and distressed properties. These houses were unsuitable for raising families. Davis saw an opportunity to address the housing disparity by offering working families access to quality and affordable housing options.
Initially, the Steinbridge Group formulated a long-term plan to invest in rebuilding and maintaining rental properties throughout major East Coast cities. This ensured that working-class families -teachers, firefighters, and postal workers- who are the demographic most affected by increasing housing prices could have access to high-quality housing. Davis bought houses, rebuilt them, and rented out high-quality, single-family homes at an affordable price. He followed the standard measure of affordability and ensured that the rent on the properties consumed no more than one-third of tenants’ incomes without rent subsidies.
Davis then shifted gears to a more ambitious mission – turning his tenants into homeowners. The Steinbridge group has developed a billion-dollar strategy that enables working families to build generational wealth and strengthen their communities. The firm has collaborated with PNC Bank, the 6th largest commercial bank in the United States to expand homeownership among working class families. The bank provides dedicated loan officers to assist homebuyers in securing mortgage financing and contributes down payment assistance and other financial support. Steinbridge also entered a $50 million joint venture with FrontRange Co-GP Property Fund, an affiliate of FrontRange Capital Partners to build and improve housing options across the United States.
Last year, the Steinbridge Group made a $100 million capital commitment to HBCUs. The firm will produce attainable housing for HBCUs in the nation’s fastest-growing cities through its investment partnerships. Davis’ impact investing strategy espouses the transformational potential when profit-making complements social good.