By: Christine Yang '23

Columbia Business School’s case competition team finished second place in the 2022 Impact Investing in Commercial Real Estate Competition hosted by the University of Miami Herbert Business School. Team members June Deng ’23, Niklas Lord ’22, James Rowen ’23, Chenjing Wang ’23 and Christine Yang ’23 impressed the judges with an investment thesis to rehabilitate an existing mix-used asset located in Mott Haven, South Bronx, that aims to alleviate the housing crisis with attainable rental units, provide transient housing for survivors of domestic violence and offer a ground floor retail mix supporting financial and food security.

The development, named Haven, transforms the property into 24 market-rate one, two and three bedroom units, and 16 micro-apartments for short-term residences in partnership with a local domestic violence non-profit. June Deng ’23 says, “The ongoing pandemic exacerbated the housing crisis, especially in low-income neighborhoods like Mott Haven. On top of that, lockdowns restricted population movement and as a result, New York City has seen a 33% spike in domestic violence cases.” The proposal aims to provide a viable solution to meet the high demand in the neighborhood. The ground floor retail will drive food and economic equity by offering a bank with financial and educational services, a fresh produce grocery store, and storefronts with a flexible lease plan to encourage local, minority-owned businesses to thrive. Additionally, the renovation will adopt green design principles that incorporate an urban rooftop garden, solar panels, and energy efficient measures, including replacing the windows and boiler, insulating the roof and updating HVAC systems and lighting. “The goal was to maximize the project’s sustainability potential by optimizing cost and energy efficiency in the building, reducing cost burdens to our tenants and minimizing the environmental impact,” Chenjing Wang ’23 explains.

The proposed programming delivers impact socially and environmentally while also achieving competitive financial returns. The Haven team performed detailed due diligence and market analysis on construction costs, rental income and operating expenses to project the pro-forma cash flows of the project. Niklas Lord ’22 shares, “The more challenging aspect was the significant research into sources of financing outside traditional equity and debt.” The team’s proposed capital stack included creative uses of low-cost financing initiatives, grants, subsidies, and tax benefits to boost the financial returns to equity investors. James Rowen ’23 adds, “We took advantage of Commercial Property Assessed Clean Energy Financing, New York City’s Green Roof Tax Abatement and ConEdison Energy Efficiency Subsidies, to name a few, to fully finance the green design renovations and energy efficient retrofits.” Investors would also benefit from the opportunity zone status of the Mott Haven neighborhood for tax deferrals and potential tax-free capital gains.

The case competition, with judges from prominent U.S. real estate companies, was a prime opportunity for the team to put theory into practice. The team members navigated the full cycle of a real estate investment from sourcing a building, forecasting cash flows, evaluating exit strategies, and presenting to judges akin to an investment committee. The real estate industry is seeing a shift from environmental or social impact being an afterthought to investors targeting specific ESG goals. The Haven proposal shows the possibility to “do good and do well” by simultaneously delivering positive ESG impact and generating healthy returns.

Christine Yang ’23 is a first-year MBA student at Columbia Business School (CBS) focused on real estate investment management and will be interning at Hines this summer. At CBS, she is an Admissions Ambassador with the Hermes Society. Prior to the MBA, Christine worked for 5 years at JPMorgan as a product manager leading a mutual funds trading platform. There she was responsible for overseeing $260 billion in assets across over 200 client relationships. Christine graduated from Carnegie Mellon University with a degree in Business Administration concentrating in Finance in 2016.