By Michael Coughlin Jr.
In a more informal monthly meeting over Zoom earlier this month, the Community Alliance of Mission Hill (CAMH) learned more about a company based out of Boston focused on real estate called Groma.
Chris Lehman, a Co-Founder of Groma and the company’s Policy Architect, summarized the primary business model as “to acquire, modernize and operate small unit-count multi-family rentals in the Boston area.”
Lehman continued and explained that of the properties owned by Groma, about 90% of them are triple-deckers.
“We have found these to be a, I think, really neglected asset class in a lot of ways, and so we are really committed to improving the physical qualities of these properties, creating a great resident experience, and being a good landlord and neighbor for our tenants and neighbors,” he said.
While the abovementioned information is one aspect of the company, another deals with investing and ownership.
“I think many of us are concerned with the affordability of real estate in the Boston area, and so we are working on financial products to make it easier for a wide array of people, including eventually our renters, to be able to actually have an ownership stake in these properties,” said Lehman.
This component deals with the GromaREIT (Real Estate Investment Trust), which Lehman explained is, at minimum, a part owner in all of the company’s properties.
Essentially, Lehman compared the GromaREIT to an index fund but for real estate in which investors can buy shares in the GromaREIT, which, as mentioned, is at least part owner in all of the properties.
“A REIT is an investment vehicle that basically enables people to build fractional ownership in real estate assets, and so the GromaREIT is a REIT that owns primarily triple-deckers — though there’s a few exceptions — and enables people to basically have investment exposure to those properties,” said Lehman.
It should be noted that currently, only accredited investors — based on income and wealth thresholds — can invest, but Lehman indicated within the next year or so, there is hope to allow anyone to own shares.
As the discussion progressed, one attendee suggested that in the future, Groma create a Mission Hill category for investments. “If everybody’s making money off of Mission Hill, Mission Hill homeowners should be making some money too,” said the attendee.
Another attendee had asked if the stock was currently traded on the stock exchange, and the answer was no.
“We will eventually try to do that, but as we have learned in our interactions with auditors and other financial industry professionals, there are a lot of disclosure and reporting hurdles you have to go through,” said Lehman.
The same attendee questioned if investors have control over aspects such as where to invest and how to manage.
Lehman explained that currently, the investor base is small, and there are personal relationships with some, so sometimes things like strategy are discussed.
However, he also said, “As we progress into the future and we get to the point where we have, say, thousands of investors — there are still voting rights to some degree based upon the ownership, and so that necessarily informs our strategy somewhat — but the mechanism by which that happens becomes a bit more complicated.”
This same attendee, after asking questions, expressed concern, pointing to the existing number of absentee investors and non-owner occupied residences in Mission Hill and this model potentially leading to more transient populations moving into the neighborhood and pushing out long-term residents.
“I’m rather alarmed, to say the least, to see that Mission Hill is now going to become the playground for a real estate investment trust to buy up property; this is just the absolute opposite of what we need here,” they said.
Another attendee wondered if this idea would really be a good way to build equity in society, “especially here in Boston where African-American people have been really sidelined on purpose.”
In response, Lehman said, “The concern you’re expressing there is one that we share, and that was a non-trivial part of the reason we’re pushing for this kind of community ownership model.”
“I think one of the biggest reasons that a variety groups, whether those are racial groups or other groups, have had trouble building wealth, and building intergenerational wealth in the United States is the barriers to entry in the traditional homeownership model… the idea behind our model is to enable people to invest at whatever pace they’re able to.”
As the meeting continued, residents discussed fears of long-term residents being pushed out, ideas for stabilizing the neighborhood, providing equitable opportunities for investment, and much more.
Ultimately, CAMH’s president, Martin Beinborn, stated it was good Lehman reached out to the community and mentioned possibly following up on the presentation.
To learn more about Groma, visit its website at https://www.groma.com/.