Photo by Tom Jenz
Kevin Newell
Kevin Newell
At 37, Kevin Newell is the founder of Royal Capital Group that owns several buildings in the Downtown and inner-city areas. I met him at one of his premiere buildings, the Five Fifty Lofts, its glass skyway linked to the Bucks arena across Juneau Avenue. Before we sat down to talk, Newell showed me around,112 apartments and condos in six stories. If a building could be proud, Five Fifty Lofts would tip its hat.
Tall and fit, Keven was dressed fashionably in all black. I found him immediately engaging, a singer’s soothing voice and delivery, but a strong personality. An elastic mind on the move.
Tell me about your background, where you grew up, your parents, your neighborhood, and your schooling.
When I was two years old, my mom moved me and my two older siblings from Mississippi to Milwaukee. I went to grade school at Phillis Wheatley on North 20th and Wright. Then, I went to, Neeskara Elementary, Samuel Morris Middle School and to Custer High School. Mom moved us a lot. 21st and Meinecke, 21st and North, 31st and North, 38th and Florist—we bounced around, maybe lived in 15 different spaces by the time I went off to college.
My mom worked hard, always found us better places, made sure our needs were met. I was a social kid, didn’t mind moving, making new friends. I was working since I was six years old, shoveled snow, mowed lawns, picked up trash. Later, I worked in a pet store and a grocery store. Even did a business with my best friend. We’d go to Sam’s Club, buy a bunch of snacks, separate them into bags and give ‘em to a couple guys who sold them, and brought back half the profits for us.
How did you end up going to college?
I applied to one school, University of Wisconsin-Whitewater, the business school, and was accepted. I lived on campus, was a resident assistant, and in a fraternity, Alpha Phi Alpha. I graduated with a business degree in 2007, but I also studied psychology to learn about human behavior and social dynamics. I also did international studies, traveled to South Africa and Brazil. I was interested in how domestic environments impact social behavior and psychology. For instance in South Africa they have shantytowns, in Brazil they have favelas, and in America we have “ghettos.” These international correlations were prominent.
How did you get into construction and urban development?
In my senior year, I got into the Marquette ACRE program. That’s how I got started into the commercial real estate world.
ACRE is a minority outreach program that provides commercial real estate training, networking and mentoring opportunities.
Because I finished in the top of my class at ACRE, I was afforded a one-year placement program at WHEDA, Wisconsin Housing & Economic Development Authority, which turned into 3.5 years, where I learned how public financing works. An example is the Bucks arena which was partially funded by TIF financing and other public subsidy. Or Northwestern Mutual and Milwaukee Tool. At WHEDA, I moved up in the ranks quickly and was commuting from Milwaukee to Madison to Whitewater where I worked on my MBA and back in the same day. This went on for two years. Very exhausting but rewarding.
How did you start the Royal Capital Group? How and when did that come about?
I had a great time at WHEDA, but in September 2010 I decided to leave to exercise my entrepreneurial spirit and found Royal Capital Group. It was based on building affordable housing and an ecosystem of businesses focused on the urban core. Royal Capital was funded through two different strategies. I had some capital of my own, had no loans, and could support personal living needs. I had established relationships with equity and debt providers due to my works with WHEDA.
I started with an 84 residential unit property in Kenosha that I wanted to rehab. I sourced the capital, and with little resume experience, I leveraged a development team around the project. That project worked out well. Then, I built another 335 units in Madison with Zilber Limited as my partner, deploying the same strategy of aggregating the capital, doing a lion share of the work, but leveraging the resume of an established development team via a joint venture structure, which is what we call the win-win. I repeated this process for my first four years in the business. Eventually, I had a strong enough balance sheet and resume where could check the experience box ourselves.
Royal Capital is one of Milwaukee’s leaders in Urban Development. Your group owns several buildings in the downtown area, including the Five Fifty Lofts across from the Fiserv Forum. From what I understand, you also have a dedicated commitment to social responsibility. How does that manifest itself in your development projects? I think you call it “color outside the box.”
Social responsibility is the bloodline for every project we do. From the vision to the strategy to the execution of the development, like the Five Fifty Lofts where we are today. As the head of my organization, annually I’m in charge of a hundred of millions of dollars. From our attorney, to our lender, to the HVAC company, and other subcontractors, we put a focus on partnering with folks from our community. This is a part of our social responsibility.
You made the following statement on your company website. “We consider it a privilege to have the opportunity to serve our communities with our comprehensive, determined approach to problem-solving in the urban core.” What exactly is the urban core?
The urban core is the highly dense area of a city. So this includes downtown and inner city, neighborhoods with very high earners and those with low wage earners. One thing, we try to focus on areas of need, neighborhoods that need affordable housing.
I’ve done a number of stories on Black inner city residents, street leaders and politicians, all with their own ideas on how to improve the troubled neighborhoods, rid them of crime and drug dealing, and uplift the lifestyle and economy. There are a lot of ideas out there, but I’ve found the number one issue always comes back to infrastructure. Are you involved with any housing or development projects in the central city?
Absolutely. On the northwest side, 77th and Good Hope, and in partnership with the public library, we built a new library and 65 units of affordable housing on top of the library. Essentially, we built an infrastructure that created jobs and safe affordable housing and also the library that improves culture.
And now you are developing the old building where you went to grade school, the Phillis Wheatley Elementary School.
Yes, we are finishing construction on that project. The school’s been vacant for many years. We bought the old school from the city. We’ve been rehabbing the building, refurbishing the gym for health and wellness, and putting in a juice bar. We also added a new building on the property. With this project, we are adding a total of 89 units of affordable housing in a distressed neighborhood in zip code 53206.
How do you define affordable housing? If you are low income, does it mean you pay $100 or $200 per month for apartment rent?
Affordable housing means affordable to the renter or buyer. If you make $100,000 a year, you probably live in a $300,000 house. If you make near-zero dollars, you might rent a place for $100 per month. We do our best work in the middle via workforce housing. We target the working class who earn between $25,000 and $70,000 who typically don’t receive much government subsidies. Let’s say you do a 40-hour work week with a yearly salary of $30,000. We will build a world class, market-rate housing development through the public/private partnership. In exchange for the government’s support with construction costs, instead of charging $2,500 per month for monthly rent, we will only charge $800.
For about year, Lafayette Crump has been the Milwaukee Commissioner of City Development, meaning he oversees the central city infrastructure. Do you work with Commissioner Crump on any projects? And do you have any development ideas for the central city?
We try to be proactive working with city government and with Commissioner Lafayette Crump. He understands the neighborhoods and the needs. On the private side, we try to present ideas to government to help improve the long-term viability of our neighborhoods.
I’ve heard lots of complaints from residents as to why the city doesn’t do anything with these abandoned buildings and houses they own.
The biggest challenge for the city is to break some of their own rules. They’ve come up with rules that are archaic in nature and they stick to them.
At some point, you have to say the plan you instituted 20 years ago is not working. City leaders have power. Why not use it. Mayor Johnson is the new leader and he has the chance to act on these problems.
Then, there is the topic of racism, the tension between whites and people of color. Racism is a subject that the mainstream press likes to hear about from politicians. But I want to hear the opinions of business leaders, too. Whether we like it or not, Americans are a vast mix of ethnic and tribal people. I find it unfortunate that a country that offers so much is littered with anger and hatred.
It’s like bad news and good news. Bad news plays well in the media, and good news has a one-day news cycle. Politicians tend to polarize opinions with rhetoric, play on emotions. “Our side is good, your side is bad.” Helps them with their political careers.
Here’s my thought. I like to differentiate between prejudice and racism. Prejudice involves emotion, personal opinions. Racism is an action. Are you actively doing something to disenfranchise another group of people because of skin color and cultural behavior? Racism is a component of our community, and it needs to be addressed through infrastructure and systematic challenges. When I’m a part of diversity, equity and inclusion discussions over a development project, I say, “I’m not here to change hearts. I’m here to change policies” because policy is tied into the action of racism. Heart is emotion. Policy is racism. If Milwaukee’s community of leaders wants to be part of racial equity and inclusion, they should do so through policy.
