Spotlight On: Jill Homan, President, Javelin 19 Real Estate
May 2024 — In an interview with Invest:, Jill Homan, president at real estate investor Javelin 19 Real Estate, shared insights into the company’s focus on Opportunity Zones and impact-driven investments in low-income areas. She discussed adapting to economic challenges, exploring AI in real estate, and Javelin 19’s commitment to community development and future projects in economically challenged communities.
What have been some of the highlights for Javelin 19 over the past year?
Javelin 19 has made significant strides in the real estate industry, particularly in our commitment to impact-driven investments in low-income communities, known as Opportunity Zones. We focus on investing in these designated low-income areas. Our approach mirrors the current state of the Opportunity Zones industry, which is dedicated to identifying high-quality investment opportunities while maintaining a mission-driven impact.
Although we haven’t invested in this region yet, our involvement has been centered around supporting others in their business growth and commitments to areas like Johnston County in the Raleigh-Durham region. We assist other organizations in their endeavors and are actively seeking opportunities to expand our impact in these communities.
What inspired you to focus on Opportunity Zones?
My interest in the intersection of impact and real estate was the driving force behind my focus on Opportunity Zones. I was drawn to real estate because of its role in community evolution and the influence of physical space. The Tax Cuts and Jobs Act of 2017, which is a federal law, included a provision for Opportunity Zones, offering tax incentives to invest in designated low-income communities. I delved into this provision, working closely with accountants and attorneys to understand it, and now I work with funds and investors to channel capital into these areas.
How are current economic indicators, including inflation and interest rate hikes, influencing investment decisions in Opportunity Zones?
Opportunity Zones are part of the broader real estate private equity market, which I would describe as tax-incentivized real estate private equity. The trends within Opportunity Zones reflect those in the overall market, especially in institutional-sized investing. The current economic environment, marked by increased interest rates and ongoing supply chain challenges, is proving difficult for real estate development. Despite high construction costs and landowner expectations, land and building prices have not decreased significantly, yet interest rates have risen, posing challenges to project viability.
As a result, there is heightened market volatility and risk, leading to increased investor return expectations and higher capital costs. This situation creates a challenge in finding excellent investment opportunities, as both project costs and the cost of capital, including equity and debt, are increasing.
Despite these challenges, at Pinnacle Partners, where I am a partner, we are identifying what we believe are good investment opportunities across the country, ranging from pre-development to under-construction projects. We remain optimistic about these projects’ potential benefits for investors and their communities, despite the current economic headwinds.
Do you see any recent or upcoming policy changes affecting opportunities and investments?
There’s a bill in the House of Representatives, H.R. 5761, known as the Opportunity Zone Extension Act. This bill proposes to extend the benefits of Opportunity Zone investing from the current expiration at the end of the tax year 2026 to 2028. It also aims to renew some expired benefits and introduce additional reporting requirements. These requirements are appealing to policymakers as they provide more data to assess the performance of this tax incentive.
Currently, the bill is in the House, and I’ve been advocating for its extension. A Senate companion bill may be introduced, but it’s uncertain at this stage. This bipartisan initiative has support from both the House and Senate and was a cornerstone of economic development plans for both President Donald Trump and President Joe Biden. It’s considered one of the most significant economic development tools in a generation, which is why there’s substantial interest around it. In North Carolina, we have several Opportunity Zones, and I’m hopeful that this tax incentive will be extended with support from policymakers.
Are there any emerging trends or technologies that you foresee having a large impact on real estate development?
Reflecting on the 2008-2009 market downturn, the focus shifted to asset management. This meant being responsive to tenants, controlling operating expenses, and emphasizing asset management. With the current dislocation in capital markets and a slowdown in the multifamily and commercial real estate industry, I see parallels to that period and believe it’s crucial to double down on asset management and operating excellence.
One emerging trend I’m exploring is the application of artificial intelligence in real estate. While AI won’t replace asset management and operations, it can analyze vast data sets and help asset managers connect the dots more efficiently. Feeding historical and ongoing data into AI could aid in making quicker, more informed decisions, especially when financial precision is vital. I’m considering how AI’s evolving technology can be applied effectively in our industry.
What role should real estate developers play in community development, particularly in economically challenged communities?
My experience with high-quality real estate developers has been overwhelmingly positive. I recall a project in Durham where we redeveloped a blighted hotel and two gas stations. This renovation included soil cleanup, and we built an apartment community, effectively connecting a key street from Duke University to downtown. This project, almost a decade ago, was one where elected officials and the community were unanimously supportive, contrasting with the usual apprehension people have about new developments.
The developers I work with are deeply invested in their communities, often living in the areas where they build. They engage with the community, explaining the reasons behind their projects. They face financial and physical constraints, which shape what they can achieve. Responsible investing in real estate, especially in Opportunity Zones, involves engaging with the community, being creative, and bringing necessary capital to areas that desperately need it.
What is your outlook for 2024 and your top priorities in the next two to three years?
I am optimistic about our organization’s future and our role in the economic and social well-being of communities. While we haven’t yet undertaken projects in Johnston County or the Raleigh area, I am dedicated to helping these communities. My focus is on making impact-driven investments that positively affect change and improve residents’ quality of life. I anticipate working more directly in these communities as part of my business, especially in Johnston County and the Raleigh area, continuing our mission of driving positive change through strategic investments.
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