Driving Sustainable Growth: Pioneering Positive Change: Balancing Profit, Purpose, and Politics in BTR and SFR

Insights from Moderating the ESG Panel at IMN East with Industry Leaders

In May, the Information Management Network hosted its 12th annual Single- Family Rental Forum in Miami, Fla. Globecore Group CEO Chantal Gakwaya was featured as moderator of a panel discussion entitled, “Making The Numbers Pencil: ESG (environmental, social and governance), DEI (diversity, equity and inclusion), and Working With Local Politicians While Bettering The Community.” She said:

“It’s a pleasure to be the moderator for this panel on the IMN Single-Family Rental (SFR) and Build-to-Rent (BTR) event. The progress being made in these sectors is truly commendable and showcases innovative approaches to supporting residents and promoting sustainable living.”

Other panelists included PEMCO Capital Management CEO Louis Amaya, Stellar Communities Managing Partner Larry Baum, Quinn Residences Vice President of Construction Peyton Harm, MFX Ventures Principal Andy Zhu and Wedgewood CFO Steve Meilicke.

Examples of Innovative Approaches to Supporting Residents and Promoting Sustainable Living

The following examples underscore the innovative strategies being implemented in the SFR and BTR sectors, focusing on resident support and sustainability:

• Tricon Residential has taken a significant step by introducing a program where qualified residents who have lived with Tricon Residential for five years or more are eligible to receive $5,000 toward the down payment of any home.
• Tricon Residential’s initiative not only supports long-term residents in achieving homeownership but also fosters community stability and loyalty
• Similarly, the Quinn BTR Community is leading by example in sustainability. By installing solar panels and passing on the savings to tenants, Quinn is reducing the environmental footprint of their properties while providing financial benefits to their residents.?
• This approach highlights the importance of integrating eco-friendly solutions in residential developments and the positive impact it can have on both the environment and the community.

Case Study: How do you align ESG and DEI initiatives in your business model?

Steve Meilicke, finance chief of real estate investor Wedgewood, shared how his company has integrated ESG and DEI initiatives within the business model, observing that 50% of the housing stock is over 40 years old, much of which is at risk of obsolescence. He pointed out that while building new affordable homes is always an option, there are barriers to this approach.

Larry Baum of Stellar Communities agreed, saying,

“There are too many barriers and bureaucracy to building affordable homes. Permitting fees alone cost $30,000. And it’s a piece of paper. People wonder why homes are scarce and so expensive. It’s because of that.”

Wedgewood’s Meilicke went on to explain that the most affordable home is the one that already exists and can be restored to its original potential, adding that these are precisely the types of homes that Wedgewood targets.

Wedgewood uses smart renovation for value-add while keeping it affordable. Wedgewood’s business model is to redeploy those homes and keep them in the affordable housing ecosystem for what Meilicke described as a win/win.

Sustainable Solutions in Home Construction?

There are numerous ways in which to incorporate sustainable solutions in home construction, delivering benefits to all stakeholders, including developers, tenants, homeowners, and communities in the process.?

• One way to ensure sustainability is for communities to become green-certified by the National Green Building Standard (NGBS), a designation of the National Association of Home Builders (NAHB).?
• Sustainable home construction translates to savings for residents through lower power bills and a smaller carbon footprint.?
• Developers can also source their materials locally, say within 500 miles of each community, thereby reducing their carbon footprints. ?
• Sustainable development works, protecting the developer’s bottom line while also providing savings to residents.
• Green financing opportunities that involve sustainable projects or companies that meet certain sustainability standards.?

Government Support

Developers view government support through different lenses, debunking some myths and shedding light on where more work needs to be done.?

Investment Returns: PEMCO Capital Management CEO Louis Amaya explained, “There’s I believe a misconception that if you participate in these types of programs, you’re sacrificing returns. Our returns are generally better in this structure.” ?

Government Flexibility: “When you work on projects that are good for the community, that city politicians are actually looking for, they’re very open to figuring out how we can make development work.”

Green vs. Carbon: Stellar Communities’ Larry Baum was candid about the economics of sustainable building, saying, “Until the energy of heaven (sky, wind, sun) is more efficient and cheaper than the energy of hell (carbon controlled), then how are we going to see real green initiatives? It’s a fact,” But he also expressed optimism about the future, saying, “We have to start somewhere.”

Sustainable Amenities in SFR and BTR

One of the reasons people are flocking to rentals, especially since the pandemic, is because their eyes have been opened to the amenities that rental life has to offer. Developers are increasingly incorporating sustainable amenities into their single-family rental homes and build-to-rent communities.

Globecore’s Gakwaya asked the panelists,

“Amenities are a key selling point for many BTR projects. What sustainable amenities have you implemented into your projects that promote community building and tenant well-being?

In response, they shared the following:

• Sustainable housing means looking beyond the typical amenities like pools, clubhouses and fitness centers.
• Fenced-in yards for both townhomes and single-family homes are in high demand, especially since the pandemic, giving families and their pets a place to roam.
• Dog parks are yet another way in which developers can focus on wellness at their properties.
• Smart houses include technology-powered lighting, security, voice assistants, thermostats and more.
• Community building activities and events like food trucks make tenants feel as though they’re part of a community.
• Backyards in general are a major amenity for SFR and multifamily, enhancing the wellness of tenants through pools, backyard extended porches, etc.

This is all important as developers continue to understand what makes tenants want to stay. As – Larry Baum, Stellar Communities Managing Partner, explained:

“One thing that we’ve figured out on the BTR side vs. multifamily communities is that our BTR resident is a much stickier resident in the sense that they renew their leases...I think it’s like an 80%-83% renewal rate whereas our multifamily renewal rate is between 50% and 60%.”

How SFR and BTR Are Prioritizing and Implementing Employee Training and Leadership Diversity

Disciplined communication

Townhalls

Monthly departmental meetings

As an example, Wedgewood has implemented a program called “Falcon Circle” in which junior representatives from each department gather to address anonymous issues from the employee base and debate them. Senior leaders guide the conversation, but they (low to moderate-level employees) come up with innovative solutions and make recommendations that are presented to the executive team for consideration.

“It comes from the culture of soliciting different perspectives. It’s encouraging to see a receptionist have a really great idea that gets implemented. That’s the kind of thing that ends up happening in this environment, and it’s pretty cool,” noted Steve Meilicke, Wedgewood CFO.

#SFR #BTR #sustainableliving #affordablehousing #IMNEast