US NEWS: Quantifying real estate’s glass ceiling

Those who have long suspected that private equity real estate is a male-dominated industry, if not an old boys’ club, now have data to confirm their suspicions. New research by one of the most powerful women in private equity real estate has revealed that, although there are women in the industry, a staggeringly low number of them hold senior posts in finance or investment.

In a research paper entitled “Cloistered in the Pink Ghetto: Women in Private Equity, Real Estate and Venture Capital,” Nori Gerardo Lietz, founder of boutique investment advisory firm Areté Capital, found that women are drastically underrepresented in private equity, venture capital and private real estate firms in terms of being hired and promoted within these firms’ investment divisions. The research is based on the review of employment information for 283 investment firms in the private markets. Of those 283 firms, 144 are private equity firms, 82 are real estate firms, 44 are venture capital firms and 13 are fund of funds managers.

Real estate firms had the worst statistics, with just 4 percent of all senior investment professionals being women. This is compared to 6 percent of senior investment positions held by women at the private equity firms surveyed and 9 percent at venture firms.

“The numbers clearly illustrate that women are not being hired and promoted within the investment divisions of these firms,” the report stated. “The data indicate this is an industry issue, not just an issue with individual companies, as the numbers are so consistent across firms in the private markets.”

Lietz told PERE she wrote the research paper because she “wanted to take a serious look at the question.” She added: “As someone who teaches at Harvard Business School, in the face of these abysmal numbers, how can I in good conscious encourage my qualified female students to pursue careers at these firms?”

Not only does the real estate sector have the lowest overall percentage of women in senior investment roles, it also has the highest percentage of firms without any women in senior finance roles. Of the 26 global real estate managers the paper cited, 18 had no women in senior finance positions. With four men and one woman in its senior finance division, Grove International Partners had the highest percentage, at 20 percent. Behind Grove was AEW Capital Management, with 17 percent.

PERE reached out to several private real estate firms cited in the report for comment, including The Blackstone Group, Brookfield Asset Management, Colony Capital, Morgan Stanley Real Estate Investing, and CBRE Global Investors. Blackstone and Brookfield declined to comment and, at press time, the other firms had not responded.

Lietz is quick to note that these figures are not just a result of simple misogyny; rather they are a more complicated series of results based on inertia and a self-perpetuating cycle of behaviour. One factor is that women often go to organisations where there already are other senior women, she explained. Another factor is that, in many organisations, the lack of diversity hasn’t been seen as an issue by senior management, so they’ve taken no steps to change, she added.

In terms of blame for the results, Lietz pointed the finger “squarely at the investors who claim that diversity is important, yet don’t hold any of these organisations with which they do business accountable for these results.”

The paper also provided unnamed quotes from senior partners and executives at private capital firms that shed light on some of the ‘old-fashioned’ attitudes within the industry. For example, the founder of ‘one of the world’s largest real estate opportunity firms’ is cited as saying: “It has nothing to do with being smart. When I was at Harvard, there were plenty of women smarter than me. It’s a cavemen thing; a hunter-gatherer thing. Women just don’t have the killer instinct.” When asked how he could explain the success and prowess of the paper’s author, he said to Lietz: “You’re a freak.”

Another executive, the real estate managing director of ‘one of the world’s largest hedge funds’, said about his firm: “A woman work here? My wife…would never want to work here. No woman would.”

Additionally, Lietz interviewed five major recruiters specialising in the private markets industry. They were queried as to the instructions they receive from general partners when they are asked to search for candidates. Although no one would speak ‘on the record’, they noted that the instructions ranged widely. One recruiter had been explicitly told by certain unnamed firms that they only should provide male candidates from Harvard and Stanford. They were told not to include any women on their list, as they had no interest in hiring them.

“GPs will only recognise that it’s an issue if their investors tell them that it’s an issue,” Lietz said. “Then, they need to more effectively mentor women for these [senior investment and finance] roles, which they’re clearly not doing.”