The Seminole Tribe of Florida has created a sovereign wealth fund for the financial benefit of generations to come. It is known as the Seminole Real Estate Fund (SEMREF), a holding company of the tribe. SEMREF recently acquired its first real estate investment asset. Welcome to McKinney Uptown Apartments: a 144-unit, midrise, residential complex located in lively uptown Dallas, Texas.
The fund was created to bring generational wealth to the lives of tribal members. Sovereign wealth funds are owned by a sovereign nation, such as the Seminole Tribe, and aim to diversify sources of revenue to better prepare for the volatility of markets. Sovereign wealth funds have been successful all over the world. The Abu Dhabi Investment Authority (ADIA) was formed to expand into other markets in an effort to balance its sources of revenue and acquire more investments with long-term growth.
The China Investment Corporation (CIC) is another example of a well-balanced sovereign wealth fund that protects itself from volatility by investing in multiple markets. What these sovereign wealth funds have in common is the procurement of real estate investments.
The demand for multifamily apartment rentals has increased since April. This demand is a reaction to the similar needs of competing communities. Renting is becoming increasingly more affordable. Millennials are waiting longer than previous generations to purchase single-family homes, while empty nesters are downsizing to apartments after experiencing an increase in their property values. As a result, the real estate market is experiencing a high demand for apartment units and has become a global investment opportunity.
Upscale communities, like McKinney Uptown Apartments, have the characteristics needed to be a reliable asset for the tribe. The product is not just a building, but a lifestyle with existing customer-loyalty.
During the global market shifts of 2020, McKinney Uptown Apartments has remained a desirable and competitive community to join. Even through the struggles of the Covid-19 pandemic, 100% of its tenants are paying their rent on time and in full. Residents are surrounded by dining, retail, offices, and entertainment in the local area, providing the experience of a “live, work, play” environment just outside their home. From their newly renovated units, McKinney residents can take in the inspirational view of the Dallas skyline. The property also offers exclusive amenities to its residents, such as access to a salon on the ground floor, a coffee bar, Wi-Fi, parking garage, a third-floor pool and a rooftop gym. The tribe procured the complex, strategically maximizing return on investment by utilizing a balance of cash and credit.
Until now, the tribe’s sovereign wealth fund has received most of its revenue from casino properties, but after extensive research and deliberation, it was concluded that commercial real estate is the next advantageous, conservative opportunity for tribal investment. By investing in apartments, such as the McKinney property, the tribe is taking its first steps in diversifying its sources of revenue. McKinney Uptown Apartments stands out from the opportunities that surround the tribe. The consideration process was thorough, including a financial analysis, due diligence, business plan, evaluation of economic conditions, analysis of return on investment, and effect of inflation or deflation. In fact, SEMREF continues to review an ever-changing long list of opportunities to further contribute to the tribe’s sovereign wealth fund. The generational wealth does not stop here. Each day brings continued development to grow the future wealth of tribal members.
Ari Rioseco is a freelance writer and a Seminole Tribe employee.