Jack: Welcome back everybody to the OZExpo Podcast. I am your host Jack Heald and I am delighted today to have with me Jill Homan, who's the president of Javelin 19. Welcome Jill.
Jill: Good morning and great to be with you today.
Jack: Thanks for being with us. So, we start every conversation on the OZExpo Podcast this way. We want to know who we're talking to. So, tell us about yourself. Who are you? Where'd you come from? How'd you get here?
Jill: Goodness. So, I am Jill Homan president of Javelin 19 Investments and we're a Washington DC-based real estate investment and advisory firm focused on Opportunity Zones. I’ve been in Washington DC for the last 15 Years and I prior to that, came to Washington DC after graduate school and had prior to that spent some time working on Capitol Hill. My family is from the Maryland, DC area and my parents actually just finished moving to Florida. So that's been terrific to get some time in the warm weather with the kids. So share from the DC area and excited to be with you.
Jack: So, tell us about Javelin 19, real estate investment and advisory. So specifically, what kinds of things are you working on these days? Of course, I know we're focused on Opportunity Zones, so tell us about that.
Jill: Yeah, so we're actually exclusively focused on Opportunity Zone to back and with the passage of the legislation in December of 2017 we saw it as really a tremendous opportunity, no pun intended, and thought this is going to be very, very, we think monumental legislation both in terms of positively impacted communities, but also providing a very strong vested opportunity or investment vehicle for, for investors. And so, we're focused on the investment side.
We have a project in an Opportunity Zone. It's a about a $50 million purpose-built student housing project that we're codeveloping with a partner called Rise based on Georgia. And we are just finishing the fundraising. So we're raising about $18 million of Opportunity Zone capital. And we're finishing the fundraising for that project and we'll start construction next month. So that's on the investment side. And as you move forward on a select basis, we'll partner on deals or look at investing in some projects.
On the advisory side, we are working with investors and family offices who are looking to allocate their gains using this incentive. And so these investors are looking to provide capital for the investment opportunities. So they're looking to partner with real estate developers and also making investments in operating companies. And the investment, you know, could range from $3 million on up in terms of the size investment that they would look to are the positions they would look to, to make a deal.
And so that's the advisory practice which we've been growing, and we're excited about the momentum and and the folks that we're working with. It's been really a lot of fun to work with these investors and sell the investment strategy and then just start showing them investment opportunities and helps them structure these opportunities in a way that really fit with their risk return profile. And so that's been very rewarding. And we're working with investors who have active gains right now and who are looking to allocate capital before the end of the Year. So we're really interested in seeing investment opportunities. So that's how we're focused on Javelin.
Jack: You've got a unique background. As regards to my guests on this show so far, I've talked to folks who are in state and local government. I've talked to folks who deal with state and local government, obviously because we're talking with developers and money people. But I don't think I've talked to anybody who's done both. You, according to, to my research, you were a press secretary for a congressman, and probably some other stuff to here that I didn't quite stumble onto. So, I'm guessing you've got some fairly deep and extensive connections there in DC.
Jill: Yes. So I have been politically active for 20 years and have worked in real estate investing and development for 15 Years. I like to say that doesn't mean I have 35 years of experience. That means that they overlapped in time. And so as you mentioned, I, after college, started getting involved in political campaigns and that led to a position on Capitol Hill where I was a press secretary and legislative assistant for then-congressman Bob Ulrich. He was a Republican member of Congress who represented the Baltimore suburbs.
And, and then following the time working with him, my political activities actually moved into a voluntary capacity where I continued to help with political campaigns. And then that led to running and, winning a race for a National Party position, which I continue to hold right now. I like to tell people that I'm a Republican, my sister's a Democrat we still get along.
But with that background, in terms of the political background, that was supplemented when I went to graduate school. I did a Master's of Public Policy and an MBA at Duke University. And so was able to really spend a lot of time on the policy side and really developed a passion in economic development and community development.
Jill: And that really transitioned me into a career in real estate. And so also when I was at Duke, I spent a lot of time engaging with community organizations who needed to say they wanted a center built for kids in the neighborhood or there was another kind of challenge where the seniors in a neighborhood were wanting to age in place and not need to move out because they were getting older. And so, Duke has different organizations that one of them really pull on the levers, both of the university but also the term community and work on helping these community organizations realize these visions.
So, for example, they assisted in the creation of a senior facilities, senior care facility in the neighborhood that could enable these residents who were wanting to age in place to then move into a senior center a couple blocks away. And similarly, they were helpful in securing funding and getting a children's center built.
And so seeing the engagement of the public, a large institution like the university as well as the city as well as the private sector to me was really exciting thing to play just the very small part of that, to see it happen. And so what I did while I was at Duke is two things. I started working with a local developer and because I started, I found that I had a passion for real estate investing and also development and from a development around the issue of impact.
And so impacting people's lives for the better through the, the changing communities and in the physical space. So that one component is working with the local developer. And then the second component is working with the community organizations by volunteering with Duke University's arm in the community.
And so, for my master’s thesis at the Public Policy School, what I looked at was what is the impact of small- to medium-size redevelopment projects on the surrounding residents. So look squarely at the issues of gentrification and, and how, if you have a project, that investment in an area that has not, up to this point received investment, does that investment attract additional capital. Does that investment spillover in a positive way or is it a negative? And so looked at that issue in spent a couple of years, throughout my graduate work, kind of building up to this master's project. And so then, you know, work joined a real estate development.
Jack: Whoa, you gotta give us the punchline. So, you did your thesis on this. What was the conclusion?
Jill: Yeah. The punchline with many things is the results are mixed. And so, and that's the punchline. We can kind of get in to more about why that is the case. But, in some ways . . .
Jack: That's the kind of answer that passes the sniff test.
Jack: That's probably true. Okay. I'm sorry. But you got me all excited about your study and the results. So, all right, carry on.
Jill: And I was really hoping for a very clear like here's the, here's the recipe for building a project in an area that hasn't seen investment and having that be the formula. What I found is that there's so many additional factors that go into it and that I was looking at case studies and certain areas and I looked at, it's called a longitudinal survey.
Jill: And what had taking census data from before the investment in taking census data after the investment and did analysis of that. So yeah, the results were mixed but, but really that information, I had learned and what I see the opportunity zone incentive and this legislation to me is a way that I see all my experiences up to this point, including the last of which I joined a DC-based development company.
And worked there for a period of time running their acquisitions and working on capitalizing the projects before launching Javelin 19, that gentleman 19, we've been focused on really urban infill type investment and a lot of them investing in areas that would have been considered Opportunity Zones. And so I see these experiences really kind of coming together under the umbrella of Opportunity Zone.
Jack: Oh, I guess so.
Jill: And the policy politics, political engagement and also the real estate investing. So that's when I say we've been focusing on it 100%, it's really since January of 2018 and then tactically how we've doing it, with, you know, the one project that we have in Baltimore. I see it as really a kind of a nice way to bring all of my experiences together.
Jack: I was going to say, I don't know that I've talked to anybody who's probably been working on Opportunity Zone stuff longer because if we take this back to your, to your master's thesis, this is essentially what you've been working on. That's kind of astonishing.
Jack: I don't want to put words in your mouth, but that's how it strikes me. You may be the world's foremost authority on Opportunity Zone.
Jill: I will quote you, Jack. Thank you.
Jack: I said maybe.
Jill: Be decisive Jack. I really appreciate that feedback and…
Jack: Well it really is. I don't think I'm exaggerating. I'm fascinated with anybody, who will do rigorous scholarly work on problems like this. And frankly if you'd have said, “Oh, I have the magic bullet,” or if you'd said, “I demonstrated that it's impossible,” I would have, it wouldn't have passed the sniff test. But the answer that it's that the results were mixed, that's a real world kind of answer. And somebody who's actually got the research to back it up probably is going to be able to steer around some of the obvious potholes and maybe steer towards some of the better opportunities. I'm just guessing here, but a deep regard for good scholarship.
Jill: Thank you. And I actually continued to keep in touch and talk with my professor for my master's thesis about these issues, who's now at the University of Washington in Washington State. Because I see these policy issues coming up now and being at the forefront, but then also from a practical matter, now that you have the debating the policy issue, I’m kind of being pragmatic and that side of me it's just, OK well how can these fields be executed? What needs to happen?
Jill: And I think that's a very important part because while this legislation is six pages, and at first three, a little confusing, but I got it. Well that has really spawned of those 6 pages, 74 pages of first reg, 169 pages of second regs and a revenue ruling and, and more regs to come.
And so you take what was supposed to some simple ideas is actually, I would say complicated, because the intent was not to make it complicated, but it's just dealing with taxes and structuring and real estate and stuff becoming complicated.
Jill: I've really spent since the time in January of '18 really working with groups of law firms and accounting firms, understanding the structuring and doing the really difficult mental exercises, now that we think we understand, it's really trying to map the specific fact patterns of fields on, okay, how does this deal fit? I've owned land prior to December 31, 2017, what are the best structures and working through those types of issues has really, I think how the learning of the structuring, happens. And then it's also how that benefits the clients on the advisory side is really, I'm able to look at fields and just know, this is going to take us into a gray area of, that I don't think this will actually comply with the regulations. And so therefore we shouldn't even spend time looking at this.
Jill: And then also it's just being able to outline some of the risks for investors because when it comes down to it, I'm going to talk to folks at Treasury. We're never going to have a recipe book for this incentive. And at a certain point investors either going to be comfortable with it or not. And there's investors who are ready and comfortable and have invested a lot of money using this incentive. One of which was PNC, the bank, and they invested using this incentive as early as the end of last Year. And they were investing both on the equity side, and then they were also lending into the projects where they would also get credit.
My point being is that there's not going to be a recipe book. It's really important for investors to do their own research as well as working with their own accountant and lawyer to get comfortable with this incentive or not. Because these investment opportunities are going to have people buy if they don't really get up to speed quickly. And that's something that I've been trying to work with investors that I work with. And making sure that they understand the rules of the road, make quick decisions on, okay, we're gonna look at this or we're not going to look at this. And then really drill down on the structuring.
Jack: How does somebody, anybody, manage to do as many careers as it looks like you have had all at the same time? Now maybe I'm reading things into this, but it looks to me like we've got politics, we've got obviously the investments, the advisory service, the real estate. You're also a mother.
Jack: Do you take cocaine or something? How do you get the energy?
Jill: Normal people have hobbies, you know, they golf. And so the time that other people spend for hobbies is what I allocate to my ongoing political activities.
Jack: But this goes all the way back to at least college, because you have not one, but two master’s degrees.
Jill: And I actually, I have two undergraduate degrees. Yeah.
Jack: Oh, of course.
Jill: And I do have to say that to my undergraduate degree. I have a Bachelor of Science in mechanical engineering and a Bachelor of Arts in German.
Jack: Oh, so some of the easy stuff, in other words.
Jill: But what I say, I'm one of these people that very well in math and science and just didn't know career opportunities. And my father was an engineer. And so I thought, okay, I guess I should probably be an engineer. And I was just stubborn and I thought, okay, and my friends who would change their majors when they would start doing poorly. And so I was doing well and I was stubborn. I came in engineering and I am going to leave in engineering and along the way I took a lot of German, really enjoyed it and it was challenging.
And so, I graduated and was about to graduate month out and I went to the career center and I said, “You know, I'm just not enjoying my classes.” And they said, “Okay, we'll take this career assessment.” And, and I did. And they started talking about options. Well I am about to graduate in a month, what are you doing here? But I just decided that it wasn't really the career direction that I wanted to go. And so that's when I started looking hard at, what do I have a passion for? And, and it's really trying to help people. And so that's when I started volunteering for some political campaigns and then that really stemmed into a passion and politics. So…
Jack: That is just fascinating.
Jill: I do joke that the world is a safer place because I'm not an engineer because I did well in the classroom, but goodness, my labs, I mean people would always wear a helmet because things would fly.
Jack: Nevertheless, it's kind of cool because I'm sitting here looking at your resume. You've got a Bachelor of Science and a Bachelor of Arts. I admire that. That's really cool. And then an MBA, in public policy and an MBA and a Masters in Public Policy and from that well-known, super easy University Duke. Good grief, that's just astonishing. Okay. I'm going to demonstrate my ignorance here.
Jack: Because that's my job. That's my job as the host. You are a LEAD accredited professional, explain what that is.
Jill: It's really has to do with, it's been an accreditation that has to do with sustainability and environmentally sustainable design criteria. So it's, and then actually now, LEAD is required. And a lot of municipalities require buildings to be LEAD certified. And so what that means is that the buildings need to adhere to and, and perceive certain amount of points to adhere to these environmental standards. And, and you have different levels of things LEAD certified.
So, for example LEAD Gold and you have people who've gone through the testing piece of it and also ongoing, continuing as, and that's the accreditation component of it. And so really it's an accreditation that has to do in my mind with, really keeping up with the industry and where the industry is. This is one of the reasons that I became LEAD AP. And so I'm not necessarily designing the buildings, but from an acquisition and investment point of view, it demonstrates that I have knowledge in this space.
Jack: I'm just a little bit intimidated here because I'm talking to somebody with this deep, broad background in a whole bunch of things that make you perfect for the Opportunity Zone environment. So, let's talk about the Opportunity Zone program itself. What are you seeing happening out there in terms of deals and I guess what I want to know is, are you focused locally or are you looking nationally and what are you seeing out there in terms of deals that are happening, not just for you but for the Opportunity Zone industry in general?
Jill: Yes. So the first thing I say when I speak on panels and I'll say if you remember nothing, nothing but this, deals are being done and investors are already invested in using this incentive. And so there's, I think, a storyline that has been covered by some of the media saying that no one's investing using this incentive. And everybody's on the sideline waiting, trying to figure out, are only a few people have done it. But there's been a lot of that's been allocated and there are a lot of deals under, under contract using this incentive. And just by way of, you know, one data point, mentioned PNC, but there was I know a family office for example, invested $87 million in equity into a project that Heinz is doing in Texas. And so that's just one data point. And I say, okay, deals are being done.
Jack: The $87 million, is that a single deal?
Jill: Yes, and that's equity.
Jack: Wow. Okay.
Jill: So, my, my point is, is if someone is thinking about using the incentive or someone has a gain in 2018 or has the gain now, this is a real opportunity. And investors need to go through their diligence as quickly as they can because there's a lot of timing associated with getting the capital in and meeting this certain time restriction.
Jill: And so you know, time is of the essence. So I think that's one of the more important points. And then what I've found on the other side is I've heard from investors who say, you know I'm waiting on the final regulations. And what I've found when I speak with those investors, I try to just peel back, okay, well what exactly are you waiting for because you know, let's talk about that because you know, I might know the direction where it will land or maybe you're concern has already been addressed.
And when I found with those investors talk about that they can't articulate what exactly they're waiting on, they just heard that they should wait. And so what I really think those investors are saying to me is, “Hey, I'm just not comfortable investing right now and I need to see and hear and read about all the deals that are being done so that I know this is actually being used.”
And what I expect the second batch of investors will start investing once the story line with the media is, “Wow, there are a lot of deals being done using this incentive.” But what makes us instead of, so I think, effective is the fact that you don't go to a central repository to get your Opportunity Zone incentive. It's not new market tax credits. And so, you know, Jack, you and I could do the Opportunity Zone deal and we could go out and we could buy land and we could build a building.
You and I put in money, go out and buy land, build a building. We could talk to a law firm, do the documents and have an accounting firm. Do the books and nobody would know. No one would know. Did that deal except for our lawyer who isn't going to tell people. And our accountant who will keep it confidential as well. So with that, and then you also have a lot of investors just are concerned about any headline risks. So, they are wanting to find this very attractive, they want to make investments, but they're not incented to tell everybody that they're just, they just made this investment.
The developers want to publicize their investment. But for a lot of family offices, they're fine with keeping a low profile. And so that, you know, when I describe that situation, it becomes a clear why the articles that you've read about in the paper are actually very lagging indicators of where the market actually is.
And so, when you say go to conferences like OZ Expo, and you talk to people, you'll see, wow. And especially talk to her lawyers and accountants because they're really up to their eyeballs in deal flow.
Jill: And trying to get everything done. And they're at a point that they are running out of time to say, educate their clients, they're actually transacting. And so, when you hear about all that, it's, you know, this is actually not just a niche thing. This is…
Jack: Yeah, it's happening.
Jill: A tax incentive strategy that people are actually using. And then even the application of how investors are thinking about it. You have some investors who say, look, you know, I just sold my business and I want to invest in a diversified portfolio. Meaning I want to take maybe $5 million and invest in four deals of $5 million and I'm not looking base hit a home run.
I want to make some good risk adjusted returns. You have others who say, look, you know, I see this as really a once-in-a-ifetime tax incentive, and I want to just try to knock it out of the park in and really take a higher risk. And so investors are viewing it differently, dependent entirely on their own assets, and their own investment strategy. So I think that's one when you ask about what I've been hearing, that's just really what I've at a very high level and broadly what I've been hearing in terms of what we're focused on.
Jill: We're focused, in terms of markets that we're looking at, I would say primarily from the mid-Atlantic to the southeast. We've looked at some deals on the west coast in California, Los Angeles, and so we would look at deals nationally.
And really, we were looking to invest in the LP position for investment opportunities. So, you know, participating in the 90%, for example, on a 90/10 equity deal and an equity size, for the types of deals that we'd like to invest in. I would say the equity size between on the low side, maybe $8 million. And then on the high side, maybe $30 million in equity.
And so we would look to take some chunk of that equity. So we look to invest in some chunk of that equity. I think for the investors that I'm working with, they're not right now at a point where they want to take all of that equity, because they're not necessarily, professional real estate investors. So this was something where they're taking gains from, from an investing into real estate that they're not necessarily looking to take on the risk associated with being a majority or all of the equity position, an asset type that, oh, I was just gonna mention asset type, a lot of multifamily, but we're really looking at what's the highest and best use in that particular area. But looking at a lot of multifamily.
Jack: Yeah, I was guessing multifamily is probably going to be the biggest asset class in terms of the types of, of development projects that get done. I would love to see more on the ongoing business side, but that's…
Jill: We want to see on the ongoing business the operating business side. So we're, I'm also very interested in operating businesses that are doing something in the healthcare space. So we're very interested in health care oriented operating businesses because at a very macro level, just the industry is continuing to grow. And so, would be interested in, and it could be a real estate strategy, you know, somebody could have an acute care facility that they would be building or it could be on the operating business side.
Jack: Yeah. I've got a lot of different questions. This is one that I haven't asked anybody yet. Are you seeing investors who have taken cap gains from something like, say the equity markets, the financial markets and buy and are becoming new real estate investors because of this program?
Jill: So I would say I haven't said, the investors that I'm working with are really utilizing gains that were previously harvested in 2018 and so, they have, they all have access to significant stock positions that they could sell, but we're first really on the clock with existing gains.
And so, one industry for example is not a real estate investor but is very interested and wants to use this incentive and is it's been going to target and majority of their investments in real estate. And so, I would just say the only difference in your question because my answer was the yes, but the gains came from somewhere else, not selling stock.
Jack: Yeah. Really you answered my question. Are we seeing people who traditionally have not been real estate investors pushed into this program because of these opportunities?
Jill: Maybe so. Well, and what I would say is investors who are investing at a significant level, for the most part, they are real estate investors. Somebody is investing $5 million and $20 million, $30 million of equity, and they're interested in investing using this incentive. I've just yet to meet an investor who has the ability to write a $5 million or $10 million equity check who doesn't already have some exposure to real estate investing. And then the question is just, are they more interested in investing through a fund vehicle?
Meaning, going on a bank platform and investing in multiple assets that a fund, so almost a blind fund, or are they interested in investing directly in their own projects and creating their own portfolio. And the investors that I'm working with are doing the latter, so they're investing directly in projects and not, I'm going to fund route meaning investing in a fund that's on the Morgan Stanley or Merrill Lynch Bank platform. And that's really because they're wanting to, it's, it's cheaper, meaning they don't pay the fund fees, but then they also want to create their own portfolios.
Jack: Makes sense. Well, this is my favorite part of the interview here where I find out, you clearly know what you're talking about? And I had high hopes for you and you've definitely exceeded them.
Jill: Thanks Jack.
Jack: But, well, you know, I get to talk to a lot of really interesting people, but I haven't talked to anybody who's, who's the background that you've got. And this is fun, particularly for somebody as young as you are. I, you know, I can do my math and you're like, I just don't think you're old enough to have the experience you've got. Oh Geez. Okay.
Jill: You’re very nice, Jack.
Jack: This is where it gets fun. So, this is where I find out about Jill Homan the person rather than Jill Homan the expert.
So, you've actually already kind of obliquely answered the first question I like to ask, which is what do you do with your spare time? It sounds like the answer is you don't have any, but feel free to correct me.
Jill: Well, no, I would say my, my spare time, I'm involved with organizations, I've said political activities, but one of my favorite things to do actually is I run and my favorite thing to do on the weekend is take my daughter in a running stroller. And so we go running and at the end of it we have a coffee and I'd take her to a playground. It's cute. So she's two-and-a-half.
Jack: And so, she gets coffee, is that what you're telling me?
Jill: Exactly. Exactly. No, I don't. The coffees for me. and then afterwards she likes to tell everybody how fast she ran and ...
Jack: Oh, how fun.
Jill: grow up thinking, running as a piece of cake where she sits there and eats snacks and I'm sweating. It's a lot of fun, I really enjoy that.
Jack: Oh, I can imagine.
Jill: So, we have a, and I have a seven-month-old and so we got a double running stroller and I had one of my friends ask me, she said, “Oh, you know, is this propelled?” And I'm like, no, I mean that's my job.
Jack: That's you, yeah.
Jill: There's nothing like, you know, pushing buttons. So I'm excited to take them out as well and having to do the double and, but it's also like Moses, Moses parting the sea when I come running.
Jack: I can imagine. Oh, my Lord. Okay, well now I know I've gone from intimidated to disbelief that a woman with children is doing what? You're probably crazy. This is my favorite question. And everybody, everybody loves this question. So, you get to imagine something. Imagine the new world you are queen for a day.
Jack: And I mean like the actual, the actual region of the entire world. But it's only one day.
Jack: You've got the power, you've got the power of a sovereign, but that only for a day. And you get to solve one problem and one problem only. What's that problem you are going to solve?
Jill: Well, I take a fun question. I'm going to make it a little bit deeper. I would say the public policy side of me comes out and so would have to go and say the more serious answer would be the one problem for the day was the poverty. It's something that, you know, my thinking around economic development has to do with really poverty reduction and you can really reduce poverty through two sides by one, increasing educational attainment and provide more access to jobs. And it's something I think the Opportunity Zone incentive can do.
But so that's my more serious answer that I would say the, more fun or lighter answer maybe. That for a day, there would be no negative news and we did only be positive news and lighthearted story stories and only positive things on Facebook and all the other social media.
So would Ithink that would be, the one thing I would do for a day, it's just make it a little bit lighter and of the, for example, the stories. I do two things on Facebook. One is I share pictures of my kids. And then the other is the news articles that I send out are like the story about the dog who ran 400 miles and found his way home after two years of being lost, you know, the kinds of happy stories,. So I just think, I think that would be a good use of 24 hours. So yeah, that's what I would do.
Jack: Actually I don't think that's, that's about it. I think that's actually a great idea. We'll Jill it's been a great conversation. I've really enjoyed getting to know you. Have you got any last words for our listeners before I let you go?
Jill: Well, they can find me on Twitter at @JillHoman and on LinkedIn it's Jill Homan, just go to our website, Javelin19.com and you can find my contact information there. So we'd welcome sharing from folks and really appreciate your time Jack and what you're doing this terrific podcast and thanks for having me.
Jack: Certainly. Well that, and I will remind our listeners that all of Jill's contact information will be also available on the podcast website so you can get it there. Well, on behalf of Jill Homan and Javelin 19 advisers, I am Jack Heald for the OZExpo Podcast. Thanks for listening. Be sure to hit that subscribe button so you get notified every time we have a new episode come out, which these days is happening almost every day. And we will talk to you next time.Announcer: This podcast is for informational purposes only and does not constitute legal tax or investment advice. For specific recommendations, please consult with your financial, legal, or professional.
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