Casinos aren't the only thing Natives Americans are investing in. The historic displacement of Native Americans led to policies such as the Indian Gaming Regulatory Act, which was passed in 1988 to help fuel a now $33 billion-dollar casino and gaming industry for 247 native tribes. But after being hit hard by the coronavirus pandemic, many nations are looking to diversify their holdings and income streams while recapturing land in their historic territories. Thankfully, it seems new policies may open doors to make the move into alternative real estate assets -- on and off reservations -- more attainable.
Move into commercial properties
Political, economic, and societal changes are also driving tribes to move into alternative land and real estate investments outside of casinos. Existing tax credits, including the New Market Tax Credits, opportunity zones, and lending programs by the Bureau of Indian Affairs or U.S. Department of Agriculture, will provide loans of up to 90% for projects on or near reservations, presenting unique financial opportunities for nations to partner and participate in new opportunities in commercial real estate (CRE).
Gun Lake Investments and Waseyabek Development Co., the investment arm of the Huron Band of the Potawatomi, recently acquired McKay Tower, a multiuse commercial development in Grand Rapids, Michigan, for $17.5 million -- one example of how tribes are branching into commercial real estate.
The Squamish Nation just approved a new development for unused land owned by First Nations outside Vancouver. The new district, called Senakw, will have 11 towers providing 6,000 residential units for an estimated 10,000 residents -- a dire necessity in an undersupplied market. The community's development will require major infrastructure development from the city of Vancouver, including schools, transportation, grocery stores, and more.
However, this isn't a new venture for all. GF Properties Group, the real estate investment arm for the Southern Ute Indian Tribe, owns real estate investments, including apartments, mixed-use, industrial, and office space in 10 states. The Salt River Pima-Maricopa Indian Community also has developed a significant real estate portfolio over the past decade through its investment branch, Salt River Devco, which includes several hotels, offices, and industrial buildings.
Barriers are being reduced
Historically, real estate development was challenging for tribal nations in the United States. More than 90% of reservation property is owned by the Bureau of Indian Affairs, with less than 1% of “fee-simple" property owners having the ability to freely sell their land or build on it. The lack of subdivision into parcels in addition to fractionalization made the development of the land difficult, if not impossible. Even when development was possible, many reservations are located in some of North America's most undesirable, inaccessible areas, making development within the reservation less than ideal.
But that seems to be changing. Deb Haaland, the new Secretary of the Department of Interior and first Native American Cabinet secretary in history, is helping the Bureau of Indian Affairs' regional offices speed up decisions for tribes with open applications for the reacquisition of lands in or near reservations.
Among the challenges native tribes face today is the lack of infrastructure. Also, managing the legal and financial processes while including tribal leaders and government officials can be complicated for these types of investments. It can take anywhere from three to five years for a tribe to establish an autonomous investment operation, and developments outside of casinos right now are few and far between.
Partnerships with investment firms such as TFA Capital Partners, an advisory firm for Native American Tribes, and other real estate development companies are often beneficial because they expand their bandwidth and buying and management capacities by helping to establish the right financial and legal structures within the tribe.
The Millionacres bottom line
It's likely we will start to see more and more tribal-owned real estate developments beyond casinos over the next few years. Tribal nations are still very much in an experimentation phase in exploring what CRE assets provide the most profitability and opportunity. But if proven beneficial for the tribes, it's likely tribal-owned real estate developments will become a common sight in the future and a viable way for tribal nations to reacquire their lands.