Chicago TREND’s New Fund Aims To Boost Local Ownership Of Shopping Centers

Must read

Back in 2020, Lyneir Richardson pivoted his then five-year old firm, Chicago TREND Corp., to switch from making loans to entrepreneurs of color to helping people of color own commercial real estate. As part of the plan, residents of underserved urban communities could buy a small equity interest in shopping centers located in or near their neighborhoods. That would allow them to build wealth, while also helping neighborhoods to thrive.

Lyneir Richardson

Chicago TREND

Recently, he took another step by launching the TREND Fund, aimed at raising $50 million to buy 12 more shopping centers—he’s acquired four so far— with more than 1,000 local small investors making investments of $1,000 to $2,000. Chicago TREND is the general partner. “We’re making more people feel connected to the ownership of commercial assets in their neighborhood,” says Richardson.

Trouble is, Richardson is finding that, despite pledges of millions of dollars made in 2020 to address racial justice issues, overall investor and corporate enthusiasm for such efforts has waned.

By the end of month, Richardson expects to close on a second site in Baltimore—the first deal financed by equity from the TREND Fund and 200 community investors. That will bring the total number of community investors to 340.

Shopping Centers and Community Investment

So far, Chicago TREND has bought and upgraded three shopping centers in Chicago and one in Baltimore. Now, with three years under his belt since Chicago TREND bought its first property, according to Richardson, the company has been able to build a model he can expand nationally. The new fund, he hopes, will help him to accomplish that.

Central to the model is a focus is on shopping centers, not malls, where tenants are establishments selling necessary or everyday services, like drug stores and nail salons. “These are places you go to every week,” says Richardson. But if they’re not maintained or attract little business, such shopping centers can also hurt the neighborhood they’re in. “They go from being an asset to becoming a liability,” he says.

Giving community residents the chance to have an ownership stake in those shopping centers is also central to Richardson’s plan. That’s partly because it’s likely to encourage locals to patronize the establishments there and regard them in a different way—as an asset that can potentially improve the value of their homes and the quality of life in their neighborhood. It’s also a way for residents to accrue wealth they wouldn’t otherwise be able to build.

A Matter of Timing

Richardson ended up spending more time than he anticipated—about 18 months, instead of six—to do the necessary due diligence, make his fund investment ready and find his first investors. He’s raised $10 million so far from a handful of heavy-hitters: the MacArthur Foundation, the Kresge Foundation, the Pritzker Traubert Foundation, the Surdna Foundation and the McKnight Foundation.That catalytic capital, he hopes, will help him raise more money from other philanthropically motivated impact investors—he figures he needs at least $30 million for the fund to be viable.

Chicago TREND’s first Baltimore shopping center

Chicago TREND

But Richardson is finding that task to be slower going than he’d like. The reason, according to Richardson: timing. Because creating the fund took longer than he thought it would, he fears he missed a window of opportunity. “If I’d had the fund ready in 2020 when there was so much attention being paid to this issue, we would have raised $100 million or $200 million,” he says.

For that reason, he’s engaging in an all-out effort to identify impact investors who want a return on their capital and are still focused on racial equity-related investments. “They want to see crime decrease, property values increase and more people of color have some financial participation in their community,” says Richardson. “That’s a special type of investment.” He’s been attending conferences, arranging for strategic introductions to potential investors and getting back to investors he talked to initially who turned him down because they wanted to see more of a track record.

Chicago TREND invests in densely populated communities, where at least 50% of residents are Black. Properties need to be visible, with good parking and at least 30% of tenants in health, food services or other “non-Amazonable” retailers, as Richardson describes them and are in need of capital improvements that existing owners haven’t provided. Richardson expects to own the properties for 7 to 10 years. “This is not a quick fix,” he says.

More articles

Latest article