Some of these answers will come from investigating the social impacts existing projects have had. Cahoon has currently tasked students with developing case studies of existing apartment complexes, strip malls and other developments. By working directly with the property’s owners and investors, students will learn both what the owners hoped to accomplish, what the impacts have been and where they haven’t succeeded. As they lay the intellectual groundwork for the fund’s future investments through their research, they’ll also be looking for opportunities to invest in.
“I need students who are not just going to be students but owners,” Cahoon says. “I told this to my students last night: ‘You have to own this class. If you’re expecting to sit back and receive information, this is the wrong class for you. But if you’re taking an ownership mentality, if you’re curious and dedicated and you buy into the vision — that’s really what we’re looking for.’”
Students will also have to prove their mettle by presenting their recommendations to an investment committee of seasoned real estate and economic development professionals. Alongside Vanderstraaten and Stamolis, the committee includes Cullum Clark, director of the George W. Bush Institute-51 Economic Growth Initiative and an adjunct economics professor, and Chris Kleinert, co-CEO of Hunt Consolidated, a sprawling private company with specialties in energy and real estate. The committee’s rigor is meant to ensure that the fund invests in the strongest possible projects.
“We’ve taken a very institutional approach,” Cahoon says. “Our investment committee is very much in the weeds and protective of donor dollars to make sure that we are investing wisely to minimize risk and achieve the strongest returns. This is not a bunch of students who are out freewheeling. I wrote our fund guidelines in the same legal manner that any private equity firm would.”
The responsibility to create returns on the investment is complex enough. What separates this class from similar ventures is an imperative for the students to also demonstrate the social benefits of their proposed investments.
“To our knowledge, this is the only student-led investment fund to focus on economically disadvantaged areas,” Vanderstraaten says. “We want to put students’ bright brains to work at helping to solve problems in the community. We found that this age group, in particular, really latches onto that and likes to spend their time in meaningful ways. Their eyes light up when they get to apply their skills toward helping other people. It’s a gratifying feeling to know that the end product of this fund will positively impact other people for generations.”
In a purely dollars-and-cents framework, that means they’ll almost certainly be generating more modest gains than would be possible if their only metric was financial. Yet that wouldn’t be preparing students for careers in which they will have to think across more variables than simply a rate of return.
Increasingly, companies are considering their commitment towards enhancing environmental, social and governance (ESG) policies in their investments and hiring accordingly. Students unable to scrutinize a proposal along those criteria won’t be ready for a global marketplace. Some 90% of companies in the S&P 500 publish some sort of ESG report, a recent McKinsey and Company analysis found, adding that inflows to “sustainable” investment funds rose from $5 billion in 2018 to $120 billion in just the first half of 2022 alone.
For guidelines on weighing potential social and environmental outcomes, students will look to the Global Impact Investment Network’s IRIS+ metrics, which are among the world standards in this area. Ultimately, the class may make an investment in a project for which impact measurements don’t yet exist. This might present a chance to enlist researchers from another department or school across the campus. One investment the class considered was a possible apartment renovation near an elementary school in a lower-income neighborhood. They wondered: Would it be possible to measure differences in educational outcomes for those who lived in improved, stable housing?
Companies and professionals who can demonstrate a social value beyond merely creating profit will outlast and outperform their counterparts. In the past two years, a pandemic and its fallout played havoc with the prices of homes, office buildings, loans, cars and food. Businesses that could read the politics and economics of Zoom schooling, mask mandates, work-from-home years and stimulus payments would have tremendous advantage over those that made real estate investments expecting a fixed rate of return ad infinitum — after all, the very ways in which people used space changed, fast. In particular, any real estate professionals who made early bets on Dallas becoming a favorite destination for job growth and corporate relocation would’ve emerged in a strong position despite a hectic couple of years. Risk happens in the real world, and the real world is messy. It’s in this messy world that real estate, in Cahoon’s view, proves its value.
“Frankly, I don’t feel like the real estate industry has done a good job promoting itself in terms of what it does to support the environment and society,” Cahoon says. He rattles off a litany of examples: attainable housing, strategically placed retail and projects that serve schools, public transit and health care.
Vanderstraaten believes a program that considers the wider effects of real estate will better equip students to provide service and value to their communities, whether they continue to live in Dallas — as about half of the program’s graduates do — or head to other parts of the country and the world. That perspective need not replace the fundamentals of earning a return on investment. Rather, it’s meant to add to the kit they bring to finding deals and projects that bring the greatest benefit to the greatest number of stakeholders.
