Today's capital market segment is brought to you by Alpaca Now! Impact investing has grown from a nice strategy into a multi billion dollar asset class. But as global challenges like wealth inequality escalate, investors are looking for financial structures that can create systemic change at scale.
And one of those strategies gaining traction is shared ownership, a model designed to make appreciating assets like homes and small businesses more accessible while delivering consistent financial returns. Well, joining us live here at the New York Stock Exchange to discuss market opportunities in shared ownership.
It's more iodine senior officer on the investments team at CalPERS impact. Great to have you here. Thank you so much for joining us.
Thank you Remy. So we're really excited about this asset class. And for those who might not be familiar with it, shared ownership means collective ownership of an asset. So examples of that in the employee ownership space are employee stock ownership plans, worker owned co ops, as well as employee owned trusts.
But we really see this proliferating across the whole asset class. So we're we're also excited about the movements in the real asset space. So housing, commercial real estate. And it's really we're in this defined moment with the growing wealth inequality in this country, the housing affordability crisis and the silver tsunami, which I'm not sure if your viewers have really heard about.
But essentially in the next five years, because of age demographic shifts, we're going to see 14 trillion of small business assets change hands. So we have this really important moment to ensure that collective asset ownership can happen in this time, so that we broaden the individual's ability to access assets that grow their wealth.
Because we know if you really want to grow your wealth, you're not going to do that through wages. You're going to do that through ownership.
Yeah. And you touched on a lot of key points here that all of us are watching, whether we're talking about Wall Street or Main Street. So I do want to start out by looking at small businesses. So tell us what's happening and how succession changes things.
Yeah. So I mean, the sad reality is that especially when we're talking about Main Street businesses, but businesses writ large, only a third of businesses that get listed for sale ever do sell. So that means that 70% of businesses that are listed for sale close. Right. And when we think about the scale of this transition with 60 million employees who are employed by these small, small business firms, um, it's it's a, it's a moment that requires a solution and really shared ownership or selling your business to your employees is one great way to impart your legacy into your business or into your business, beyond you being there and and staying that for, uh, hoping that it will those businesses will exist for, for generations to come.
I think it's also important to note that even if you're not looking to, maybe you're not in the silver tsunami, but you're just looking for a performance edge for your business. Data shows that when workers act and feel like owners, the bottom line does better, and structures like employee stock ownership plans are exempt from federal corporate tax.
And in 30 of the 50 states, they're exempt from state corporate tax. So when you think about what are kind of tactical ways that you can grow your bottom line, if you're looking to enshrine your legacy, if you're looking to improve your business, employee ownership can be a really strong way for you to reach success in in your long term goals of a business owner.
Yeah. And I do want to expand on what you just said, especially with a focus on affordable housing. So on this Friday morning, of course, we're paying attention to the expectations for the Federal Reserve in terms of the rate outlook. And we all know that housing scarcity is a reality, and especially when we're looking at mortgage rates creeping higher.
Affordability is something that all of us are grappling with and we have to contend with. So where does shared ownership come into play here?
Yeah, so there's a lot of really exciting models of shared ownership and housing. One examples are resident owned communities, limited equity co ops, community land trusts. We're specifically really interested in the resident owned community space. We have a client, a borrower that's been in portfolio for a long time called ROC USA.
And you might know that our viewers might know that the mobile home or manufactured housing park market space is a really hot space for institutional investors, and it's also a place where we find a lot of naturally occurring affordable housing. And so with resident owned communities, with financing, they are able to purchase the land under their manufactured homes to be able to steward long term affordability.
So there's a lot of different models that are all seeking to enshrine affordability in long term and add both economic stake and voice for the individuals that are living there.
And while I have you here, of course we are counting down to year end here on Wall Street. It's hard to believe it's the final quarter of 2026. But when it comes to the three year strategic plan over at Calvert Impact, tell us what investment opportunities actually look like when we're talking about the institutional funds out there?
Absolutely. So in the next five years, we're looking to deploy $100 million into this strategy. And we're we're seeing a lot of exciting opportunities. You know, earlier I talked about ROC USA, which is already in our portfolio. But another manager that we've been really excited about in the employee ownership space is a group called APIs and heritage.
They've recently closed a record breaking mezz fund to support Esop transitions into businesses, and making those conversions as simple or as easy as what you would find in a private equity buyout. So whether it be, we're excited to see lots of institutional investors alongside us in there, as well as many others who are taking similar models and bringing them to the market.
And Mariah, finally, before I let you go, we have less than 60s. But for founders out there who are interested in shared ownership, what are some fundamental steps?
Yeah, so first and foremost, always good to talk to your financial professional, whether that be a financial advisor, CPA, whoever you trust to get additional resources into this space. But the beautiful thing is that there's so many different nonprofit institutions across the country that are really focused on supporting individuals as they go and decide what's the maybe right form of employee ownership for them.
So groups like that or the National Center of Employee Ownership, the employee ownership expansion, network ownership capital, ABS, project equity, it's a robust market. I encourage folks to find the right advisors to support them as they look to go to the next step of their business strategy.
Well, Moriah was a pleasure having you on the show this morning. Thank you so much for joining us here at the New York Stock Exchange.
Thank you.
Thank you.
