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Billionaire Robert Smith leads Black-owned investment in HBCU real estate

HBCU Corner

Billionaire Robert Smith leads Black-owned investment in HBCU real estate


Billionaire Robert Smith, who famously paid off the student debt for the entire 2019 graduating class at Morehouse University, has joined together with the Philadelphia-based Steinbridge Group to develop and invest in underutilized real estate and housing surrounding Historically Black Colleges and Universities (HBCUs) and other minority-serving educational institutions. On Jan. 24, the Steinbridge Group and Smith’s Student Freedom Initiative (SFI) announced a $100 million capital commitment to develop impact-focused real estate around HBCUs and Minority Serving Institutions (MSIs). Many HBCUs and other MSIs own underutilized land that Steinbridge Group’s capital commitment seeks to transform into economically productive uses that will support the growth and empowerment of the organization, officials

Said. “Our nation’s HBCUs and other MSIs produce 75% of Ph.D.s, 46% of the business executives, 50% of the engineers, 80% of the federal judges, 85% of the doctors, and 75% of the veterinarians in African American and minority communities,” said Tawan Davis, Founder and CEO of the Steinbridge Group. “This collaboration with the Student Freedom Initiative will help us engage with these institutions to discuss pathways to access our $100 million capital commitment that activates their underutilized real estate and expands their economic base.” The partnership with SFI accelerates Steinbridge’s $100 million, privately funded capital commitment to the nation’s HBCUs and other MSIs, said Davis. This commitment will transform the underutilized real estate assets owned by these institutions and help spur economic growth while addressing critical funding disparities between these and other higher education institutions. Attainable housing will be one of the focuses of Stein- bridge’s capital commitment. Currently, many faculty, first responders, and local professionals face the high cost of housing near the institutions where they teach and work. HBCUs receive less than 1% of the philanthropic giving of Ivy League institutions, which stunts their abilities to grow into research institutions and impact regional economic development. “Many HBCU Presidents struggle with the challenge of long-term debt required to finance housing requirements that may otherwise not be readily available in their communities. This dilemma affects credit ratings, recruitment of high-quality faculty, and the entire student experience,” said SFI President and CEO Dr. Mark Brown. “Uniquely, the brilliance of the Steinbridge, SFI, and HBCU relationship is that the effort allows the acquisition and maintenance of the capital asset without the negative impact of long-term debt.” Under the unique collaboration, Steinbridge and SFI will review interested HBCUs and MSIs based on a series of criteria and select those that will receive investments toward these development efforts. Eligibility criteria include land ownership within the community suitable for economic and community development, the capacity to execute an expansive development project, and leadership positioned to galvanize the initiative. “In order to educate and train the next generation of diverse leaders and innovators, institutions must have access to an affordable education, and they must be surrounded by a thriving community,“ said Smith, founder 

In a follow-up event after the historic Steinbridge and SFI announcement, Virginia Union University on Feb. 5 unveiled at a press conference that the Philadelphia based investment firm will invest upwards of $40 million in a joint venture with the university to develop up to 200 apartments and potentially some for-sale homes on university-owned land. 

VUU President Hakim Lucas said Steinbridge’s investment “will enable Virginia Union to create new sources of income, which will further strengthen our ability to create opportunities for students and the community.” 

“As the oldest African-American-owned, continuously run nonprofit, and as an anchor institution for Northside Richmond, we have a historic responsibility to drive the economic community development of this side of town,” Lucas said.

 Described as the largest investment in VUU’s history, Steinbridge selected VUU as its first recipient through its partnership with SFI. The Robert Smith-led nonprofit said assessed VUU’s land ownership and readiness to go forward with such a development and determined that Richmond, Va.-based university was the readiest of the 100-plus HBCUs across the country. 

The project is the first step of a multi-phased campus development plan that VUU unveiled last month. Sub- sequent phases are to include new student housing, an athletics and wellness center, a performing arts center and a sports arena. 

Besides the capital investment in HBCU assets, the new Steinbridge-SFI initiative will also simultaneously address the $1.7 trillion student debt burden, officials said. There are 43.6 million students with an average student debt of $39,000. Disproportionately, Black students owe an average of $52,000 and tend to carry $25,000 more in student debt than their white peers. A portion of the proceeds of the developments will support the Student Freedom Agreement fund, SFI’s affordable student loan option. 

Smith, the nation’s wealthiest Black billionaire with a net worth of nearly $9.2 billion, launched the non-profit SFI in 2020 with an initial investment of $50 million to serve as a catalyst for freedom in professional and life increasing their social and economic mobility through reducing students’ debt burdens. 

SFI’s focus on the resource needs of these institutions and their students provides valuable expertise to help decide which institutions and local communities can benefit the most from these investments. Current member partners include Walmart, Prudential Financial Services, Capital One and other top nonprofits, education groups and corporations. 

Smith is the founder and chairman of Vista Equity Partners in 2000, one of the nation’s best-performing private equity firms with more than $100 billion in assets. Vista has equity stakes in several Silicon Valley and private and publicly traded software, data and technology firms that have posted annualized returns of 31% since 2000. 

Smith’s major investments also include a stake in the former Arkansas-based Acxiom Corp., which was split in two in September 2018. Vista held nearly 870,000 shares in the Arkansas company worth a tidy $43 million before New York-based Interpublic Group (IPG) paid $2.3 billion to take Acxiom’s legacy data marketing business private. The remaining part of Acxiom has since moved to Silicon Valley and now trades publicly as LiveRamp, a San Francisco-based data analytics firm with a market cap of $2.65 billion. 

The Black-owned Steinbridge Group, led by founding partner and CEO Tawan Davis, is a real estate investment firm with assets of more than $1.3 billion with offices in Philadelphia and New York City. Both Smith and Davis are former investment bankers with Goldman Sachs, the powerhouse Wall Street investment banking giant.

 In the coming months, Steinbridge and SFI will review the HBCUs and other MSIs deemed eligible for funds and prepare a formal announce- ment of those selected to participate. Arkansas has four HBCUs, including the University of Arkansas at Pine Bluff, Philander Smith University, Arkansas Baptist College and the two-year Shorter College.

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