AMDP Memo

 

AMDP Proposal Memo

 

To: Clark Hansen, CEO, AMDP

 

From: Connor Bobis

 

Date March 8, 2024

 

Subject: Nestidd Investment Proposal Memo

 

I am reaching out to inform you about an investment opportunity in the company Nestidd, a residential real estate company taking an innovative approach to impact real estate. Because of this Chicago-based company's recurring revenue streams and innovative approach to social impact, I am recommending immediate investment into Nestidd. In terms of an investment for AMDP, this company fulfills the sustainability criteria of positively impacting:


  • The Triple Bottom Line
  • Corporate Social Responsibility
  • Social Enterprise
  • Carbon Footprint

 

I will begin the memo with all the company details and then follow up with an analysis of how this investment would satisfy the criteria for a sustainable investment. 

 

Company Overview

 

Nestidd found expertise in the real estate industry primarily through acquisitions, leasing, and property management. With this being said, they also found expertise in providing accessible housing for a specific community of historically unseen people. Their mission is to handle the entire real estate process while their partner agencies get to focus more on what matters to them, which is providing care to their patients (Nestidd website). These organizations are groups of people that provide care for adults with intellectual and developmental disabilities (IDD) and need housing for the adults that they are providing care to (Philadelphia Inquirer). Their business model is buying houses, renovating, and then leasing these houses out to agencies and non-profit organizations that require accessible housing. Now, Nestidd holds 657 properties in 27 different states over the course of their 8 years in business since they were founded in 2016 (Crunchbase). 

 

Company Business Model 

 

The business model of this company is central to their success and is fairly unique. But this strategy proves to be effective when taken to market. The majority of their business comes from partnering with care agencies that are focused on care while Nestidd handles the housing element. According to a podcast hosted by Stephen Beard the VIP of CIL a non-profit organization that tries to alleviate the accessible housing burden, “finding a good home for people with IDD can be one of the hardest parts of your job” and “there are incredible real estate firms such as NestIdd” that contribute to breaking down of these barriers to housing (Accessible Housing Matters). For example, if a Nestidd associate was in negotiations with a care agency, they would offer to buy their ideal house for their agency to provide care in while the agencies pay the rent for the unit. With these partnerships in place, the cash flows are almost always guaranteed because they are being paid for by these care-providing agencies that also supply the caregivers for the housing units, resulting in safe yet profitable revenue streams for their business as long-term leases are established. Nestidd’s network of agents and contractors allows them to complete asset acquisitions within 30 days to start the renovation process as soon as possible (Nestidd). There is not much competition in terms of companies with similar business models and the only area of growth would be to continue growing the volume of agencies they partner with. This would help continue to grow Nestidd because they have a 100% turnover rate with their clients that come back to grow their organizations with Nestidd by adding more and more houses. 

 

Company Impact

 

This company identified a need in the community and created a business model to help address this issue based on the idea. According to the University of Michigan Ross School of Business that stated, “Nestidd comes at a critical time” which further shows how the business model was centered around identifying a problem first and then building the business around addressing this problem. Nestidd seeks to mitigate the obstacles adults with IDD face when transitioning into adulthood because these adults may not be in the appropriate circumstances to live in their parent’s house forever. Additionally, the hurdle in finding housing let alone affordable housing is a challenge for any tenant, which makes it that much more difficult for these tenants to find accessible housing. Without housing, these individuals are faced with the pressing risk of institutionalization or homelessness (Arc). Nestidd holds a large portfolio of residential housing units that serve to combat this neglected need in the community. 

 

The other element of this company that impacts the community is that Nestidd chooses to acquire housing units and do accessibility renovations instead of developing housing altogether. The two major contributions from real estate development are greenhouse gas emissions and energy consumption as well as disrupting nature to modernize green areas. About 40% of global energy consumption is through real estate and 30% of greenhouse gas emissions are attributed to real estate, which is mainly exacerbated through construction and demolition (Clean CRE). Nestidd takes responsibility for its impact on the environment and limits its emissions and energy consumption by renovating houses to be accessible to tenants with IDD instead of beginning a housing project that will require heavy construction and demolition of the existing asset. Also, they plant gardens in almost all of their developments to positively contribute to the environment and as an activity for tenants to take part in making the spaces more green. 

 

Feasibility of the Investment 

 

The AMDP criteria for being a suitable investment is having a positive impact on the triple bottom line, corporate social responsibility, social enterprise, and carbon footprint. This company fulfills and almost exceeds the expectations for a social enterprise. It is difficult to distinguish “greenwashing” or a performative display of social impact and actual social impact, so I will now walk through how this investment would be suitable for AMDP. 



  • The Triple Bottom Line: Firstly, the triple bottom line refers to “three P's: profit, people, and the planet” which can outline how a company is negatively contributing to the environment (Harvard Business School). Nestidd meets this expectation because they are profitable, despite the lack of financial data on them as a private company besides the company’s continued growth, as well as positively impacting people by addressing a major issue in the IDD community and acquiring instead of developing housing.



  • Corporate Social Responsibility: Also, Nestidd operates in accordance with corporate social responsibility because they have a positive brand image and are enhancing the community they serve by addressing a need that will not be solved by the government or philanthropy (Investopia).



  • Social Enterprise: Moreover, a social enterprise is defined as an entity making a profit and a business model that “seeks to make an impact to help alleviate or improve the myriad of intractable social challenges” (Forbes). Nestidd can only be described as a social enterprise because they are making a profit as an enterprise while also making an impact by addressing a social issue in profitably creating housing for adults with IDD.



  • Carbon Footprint: Lastly, the carbon footprint of this company is measured by the amount of carbon emissions “associated with all the activities of a person or other entity” (Britannica). This footprint is mitigated by Nestidd’s choice to purchase housing units instead of constructing them from scratch since renovations produce significantly less emissions than complete construction or demolition of the existing house since the housing must be accessible for the tenants with IDD. 

 

Recommendation

 

Because of their dedication to the IDD community that Nestidd serves, Nestidd accomplishes its goal of addressing an overlooked need in the community while prioritizing social impact in all realms. As a result of their dedication to achieving change as a social enterprise, I am confident that this would be an ideal investment for anyone who prioritizes social impact in their portfolio. Even when pitted against a traditionally unsustainable industry like real estate, Nestidd defies the industry stereotypes and continues to create value for society Due to all of these factors, I recommend investing in the company soon before it grows too big or the company goes public and the opportunity for investment passes.

 

 

Work Cited

 

“Accessible Housing Matters.” NestIDD: A Real Estate Business Model for Providing Accessible Rental Housing, ahmpod.libsyn.com/nestidd-a-real-estate-business-model-for-providing-accessible-rental-housing. Accessed 8 Mar. 2024.

Brubaker, Harold. “How This Real Estate Startup with Philly Roots Helps Those Serving the Intellectually Disabled.” Https://Www.Inquirer.Com, 17 Feb. 2020, www.inquirer.com/business/health/nestidd-andrew-parker-group-home-intellectually-disabled-20200217.html.

“Carbon Footprint.” Encyclopædia Britannica, Encyclopædia Britannica, inc., 7 Mar. 2024, www.britannica.com/science/carbon-footprint.

Elsey, Wayne. “Five Essential Qualities for Social Enterprise Success.” Forbes, Forbes Magazine, 24 Oct. 2017, www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2017/10/24/five-essential-qualities-for-social-enterprise-success/?sh=553d16653e16.

Fernando, Jason. “What Is CSR? Corporate Social Responsibility Explained.” Investopedia, Investopedia, www.investopedia.com/terms/c/corp-social-responsibility.asp. Accessed 8 Mar. 2024.

“Housing for People with Disabilities & Their Families.” The Arc, 31 July 2023, thearc.org/policy-advocacy/housing/#:~:text=our%20position%20statement.-,Why%20It%20Matters,are%20experiencing%20an%20affordability%20crisis.

“Nestidd - Crunchbase Company Profile & Funding.” Crunchbase, www.crunchbase.com/organization/nestidd. Accessed 8 Mar. 2024.

“Nestidd: About Us.” Nestidd, 19 Jan. 2023, nestidd.com/about-us/.

Rosenkranz, Eric. “How Does Real Estate Affect the Environment? - 3 Factors.” Smart CRE, 31 May 2022, smart-cre.com/how-does-real-estate-affect-the-environment-3-factors/.

“Ross Alum Acquires $20 Million Fund to Purchase Homes for Individuals with Intellectual and Developmental Disabilities.” Michigan Ross, 24 July 2020, michiganross.umich.edu/news/ross-alum-acquires-20-million-fund-purchase-homes-individuals-intellectual-and-developmental.

“The Triple Bottom Line: What It Is & Why It’s Important.” Business Insights Blog, 8 Dec. 2020, online.hbs.edu/blog/post/what-is-the-triple-bottom-line. 

Pitcure Citations

 

“Sustainability Standards in New Housing.” Google Search, Google, www.google.com/search?q=green%2Bhousing&tbm=isch&ved=2ahUKEwjHz8X10OaEAxVqH0QIHXHKBDYQ2-cCegQIABAA&oq=green%2Bhousing&gs_lp=EgNpbWciDWdyZWVuIGhvdXNpbmcyBRAAGIAEMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABDIFEAAYgAQyBRAAGIAESJAdUIgEWK8ccAN4AJABAJgB_gSgAcMmqgELMS4xLjIuNC4zLjK4AQPIAQD4AQGKAgtnd3Mtd2l6LWltZ8ICCBAAGIAEGLEDwgIEEAAYA4gGAQ&sclient=img&ei=TAzsZcf5Ouq-kPIP8ZSTsAM&bih=783&biw=1440#imgrc=8Tz8I2n_BN5hPM&imgdii=Ki-19Y-99mjnDM. Accessed 8 Mar. 2024.












 

 

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