Is the real estate debt industry opening the door to equality?

A dearth of senior female professionals is evident across the European real estate financing industry. But a younger generation is pushing for change.

If you are a woman working in the real estate finance sector today, you are in a minority. But if you are running a lending business, or a debt team within a wider business, you are extraordinary.

Across the boardrooms and C-suites of the banks and alternative debt providers in Real Estate Capital Europe’s Top 50 Lenders 2022, fewer than five of the highest-ranking real estate professionals are female. In terms of wider leadership teams, the highest ratio of women to men on boards of directors or management teams is 1:2 – and only in a handful of cases. Some European lenders have no senior female executives at all.

These statistics indicate a career in property lending is not a hospitable place for women. But whether it is a situation owing to wider systemic societal inequality, industry-bred sexism, or both, attempts to improve equality are in evidence. Partly due to greater awareness, partly due to shareholder and investor expectations, real estate lenders can be seen trying to recruit more women to their ranks.

Studies showing what female leadership brings to investment performance demonstrates one reason why that effort is needed. Asset management firm BlackRock concluded in November, having studied 10 years’ worth of data on large and mid-cap companies globally, that firms with an equal gender split outperformed the least diverse companies by 29 percent per year.

“I see improvements in gender equality at junior levels – critical effort now needs to be
put into retaining those women”

Kate Tovey
Birchwood Real Estate Capital

Financial services firms without diverse senior leadership teams are today viewed as riskier, too. In December, the UK’s Financial Conduct Authority concludes its consultation on proposals to boost diversity in regulated financial services companies to reduce “groupthink” and ensure risks are better managed. This is in the context of its findings, published in 2019, that the financial sector would not reach gender parity for another 88 years. The UK is not a lone case: Deloitte said in 2022 that only 21 percent of women held board seats in financial services institutions globally, while 18 percent held C-suite roles, and only 5 percent were chief executives.

But restructuring the gender issue in the industry will require significant work, says Lucy Winberg, founder of executive search firm Hunter Scott. She says improving equality in real estate finance will be harder than in other industries because the talent pool of female lenders is “smaller” than other sectors.

Winberg has spent 12 years in executive search, including for C-suite positions for clients including US investment bank Goldman Sachs, UK manager Octopus Real Estate and Miami-headquartered private equity company HIG Capital. She specialises in finding senior-level talent for debt funds, alternative lenders, banks, hedge funds and intermediaries. She says: “The financial sector and the wider real estate industry are male dominated, but real estate lending is even worse. It has a long way to go in attracting and retaining women at senior levels.”

She also sees women, on average, being paid 10-15 percent less than men in real estate debt. However, she does note greater parity for mid-ranking roles due to the diversity gap widening even further as roles become more senior, and firms being keen to recruit more women at the mid-level.

Winberg says she encounters frustration among female professionals who “cannot progress to where they want to be”, particularly for “juicy mandates” in origination and investment. “I think this is because women are seen as not being tough negotiators or strong enough of character – a myth. This means you often find it is men closing loan deals and then passing them over to a woman to manage. Therefore, if you look for women in real estate debt, you will most likely find them in portfolio management or a credit risk position, which are very administrative-heavy roles, or as an analyst – a rung or two away from where they should be. I see so many women struggling to break out of this.”

“The total number of women coming into the profession remains small. The consequence of which is, to find a woman for a senior role, I tend to look in other sectors”

Lucy Winberg
Hunter Scott

Research from Harvard Business School shows the idea there is a connection between business skills and gender is unfounded. “Contrary to popular belief, it is not because women prioritise their family over their careers, negotiate poorly, lack confidence or are too risk averse,” Robin Ely, professor of business administration, wrote in 2019. “Men and women actually have similar inclinations, attitudes and skills. What does differ is the way they are treated on the job.”

Winberg cites examples of her female clients in real estate debt being assigned secretarial work due to a PA being absent, being asked to make tea and take notes during meetings. However, she says employers are increasingly aware of the need to promote change.

“There is a 30 percent uplift this year in mandates for shortlists from real estate finance firms we have been asked to produce that are 50 percent female. This is hugely encouraging. However, the total number of women coming into the profession remains small. The consequence of which is, to find a woman for a senior role, I tend to look in other sectors. But often offers are turned down because the senior team is made up of men. Women are deterred by this.”

A senior female director, who did not want to be named but has held positions across several well-known real estate debt teams, agrees real estate finance is “further behind” the wider real estate industry in creating more gender equality. “Real estate as a whole has come a long way and, despite some very strong, powerful female role models in lending, it remains uncommon to see women in a senior lending team. This is especially evident in debt funds, which have often been set up by all-male ex-investment banking teams, which have brought with them some old-fashioned ideas.”

She has also observed bias, particularly around the role women are able to play in lending, and discrimination towards women who have flexible work arrangements to accommodate family responsibilities. “There is a view that women are not as tenacious when it comes to deals, nor as good at negotiating as men,” she adds.

“Female graduates entering the industry today are being savvy about figuring out the right path to ensure they get what they want from their careers”

Josephine Jones
Knight Frank

“This view is wrong: some of the best deals I have seen have been done by women. Succeeding at the job is about whether you are smart and skilled, it does not depend on your sex. But this perception still persists in real estate finance and as a result, women are largely invisible in real estate and are not market-facing.”

REC Europe interviewed both well-established and rising names in the industry for their views on the changes they have seen over their careers and what needs to happen next. As a whole, they are optimistic the path to success is becoming clearer for female graduates entering the industry today.

Josephine Jones is a partner and head of strategic capital at property consultant Knight Frank in London, whose 15-year career has involved key roles at banking group HSBC as head of credit lending and managing director of its real estate finance team in Asia-Pacific. “The next generation is being strategic about how to navigate and change inequality across the board,” she says.

Jones was hired in June and joins Emma Winning, partner and head of equity advisory, and Lisa Attenborough, partner and head of debt advisory. Jones says: “Female graduates entering the industry today are being savvy about figuring out the right path to ensure they get what they want from their careers. They have an edge that perhaps women of previous generations didn’t. But I see the corporate world is also now absolutely open to supporting women in real estate finance.”

Kate Tovey, director of real estate debt strategies at Birchwood Real Estate Capital, a property lending business launched in June 2022, agrees progress is being made. “While challenges remain, it is positive the industry is more focused on them, and I see improvements in gender equality at junior levels. Critical effort now needs to be put into retaining those women.”

A significant factor in poor retention has, interviewees say, been because so many women have found it too difficult to continue roles once they start a family. Sima Kotecha, head of strategy, real assets, for UK manager Aviva Investors – another rare example of female success in real estate finance – has seen this over 20 years of experience in banking and asset management. In 2001, Kotecha joined investment bank Dresdner Kleinwort as a structured credit analyst – one of a group of seven women. Of that group, she is the only women remaining in investment banking, a fact she attributes to the difficulties women face from the industry being London-centric and from employer expectations, which can clash with the realities of managing a family.

“The benefits of diversity are clear for improving culture, decision-making
and ultimately, improving profitability”

Sima Kotecha
Aviva Investors

She says she joined Aviva Investors in 2018 because she was attracted by policies such as equal parental leave for both men and women. “That was a powerful signal for me that a company would not be judging my suitability for a role on the basis of whether I was about to start a family or not.”

Now also a mentor at The Girls’ Network, a London-based charity founded to inspire and empower girls from the least advantaged communities, Kotecha has observed numbers of women in junior roles increasing. “More women are coming into the industry now than they were 20 years ago and this kind of representation at the senior level is crucial to empowering women in the junior ranks,” she says.

Jones agrees shared parental leave is “fundamental”. She says: “It is not that we need to help women rise, it is about putting men and women in the same position when they become parents. If women are the only ones taking time out of their career, men accelerate faster as a result.”

But Jones has also observed corporate policies around parental leave beginning to have an impact: “The industry has given itself a nudge and as a result, it is easier to find female leaders than it was. I think the bulk of the work, which is around knowing what needs to happen, has been done. It is now a case of keeping up that pressure.”

Harness the multiplier effect

‘Even one additional woman in a C-suite role can make a significant difference’

In June 2023, professional services firm Deloitte published its updated report on how companies can ensure gender parity in financial services, and highlighted data that explores the power of female role models. In its research, it has found for each woman added to the C-suite, there is a positive and quantifiable impact on the number of women in senior leadership levels just below C-suite.

In Germany, for instance, it discovered that every woman added to the C-suite resulted in four additional women being added to the senior leadership ranks. Deloitte said the data indicated “even one additional woman in a C-suite role can make a significant difference, especially when there’s a dearth of women role models”.

Kate Tovey, Birchwood’s director of real estate debt strategies, says her own career has been positively impacted by seeing other women in top jobs. Birchwood was founded by senior real estate finance professional Lorna Brown, whose own career has involved stints at Royal Bank of Scotland and Blackstone. She was also the architect of Delancey’s lending business, one of the biggest names in the UK property investment market. Tovey’s experience working with Brown, at both Delancey and Legal & General’s LGIM Real Assets business was, she says, responsible for shaping her view of what was achievable.

“I have always worked with women who have been able to show it is possible to have a successful career and balance family life, and can be a mentor to other women to help navigate that. Although I know many others in the industry who have not had that same experience.”

‘Strong female leaders’

Stefanie Hanstveit, who has spent the last 10 years at Wells Fargo, and is director, real estate syndicated finance, says she is “lucky” to have benefited from seeing “strong female leaders” in the business, namely Nicola Free, EMEA head of commercial real estate, Kara McShane, the bank’s global head of commercial real estate, and Margot Waddup, EMEA head of real estate syndicated finance.

“A career in real estate finance isn’t always easy but I have had the privilege to work with successful women. You need to see people at the top that you aspire to be in order to make you feel the company is the right place for you.”

Applying pressure

Stephanie Shelmerdine is a director in Royal Bank of Canada’s Real Estate Capital Partners group and is a real estate lender well acquainted with the need to keep up the pressure. In her role, she focuses on evaluating, structuring and executing pan-European real estate finance transactions.

Shelmerdine is also a founding member and current chair of CREFC Europe Women’s Network. She launched the network because she is “passionate about increasing diversity in the industry at all levels and through all sectors, and is committed to developing opportunities for networking, mentoring and career development for all women in the industry and those currently considering a career in real estate finance”.

One of three females in the real estate finance team, and the only member of that team with a formal hybrid working arrangement, Shelmerdine says it was when she returned to work after her first child that she first felt “truly aware” of the impact of gender-related issues.

“It is crucial to be open and honest about the challenges that having children still brings to
your career”

Stephanie Shelmerdine
RBC Real Estate Capital Partners

“It is crucial to be open and honest about the challenges that having children still brings to your career. I am vocal about this because I want other women to know that at times, the juggle is hard and some days it is a struggle, that this is currently part of life. I am in a transactional role but my three-year old still needs to go to bed at seven. For me, that means being able to leave the office, get through bedtime and then log back in after that, and for that to be acceptable.

“When you have no limitations on the flexibility of your time, you can drop everything if you want to go for evening drinks or travel abroad to see a client at the weekend, and you can also be in the office for long hours.

“All of this changes when you need to leave work on time to put your children to bed, and that isn’t easy when you’re the only one on the team doing that. But while I am not always able to drop everything for work, the flip side is I believe motherhood has made me more efficient, focused and organised than I ever was before I had a baby.”

She adds, however, it is a style of working that needs to be fiercely protected as senior financial industry figures make public statements that “equate” the idea that presenteeism equates to productivity.

Shelmerdine says: “Flexibility is crucial in retaining parents – male or female. More men are being open about their need to leave work to make the school run, or working from home more, this was helped by covid but it is also the fact that a younger generation of men want to be more involved in family life, and it is becoming a recruitment point.

“For me, my senior position means that I don’t consider the question of my ability to outperform while working flexibly, but I can see if you were more junior you might be more concerned about the perception that being in the office is more productive.”

Stefanie Hanstveit, director, real estate syndicated finance, at US investment bank Wells Fargo, says making parental leave policies work requires more men being “role models” and taking the leave companies offer. Hanstveit, who is a founding member of the CRFEFC Europe Women’s Network and is set to take the role as its chair next year, says: “You see men taking leave, but it varies in terms of what that really means. You see some male colleagues taking a few weeks off for an extended family holiday but this is not the same as taking six months off while your wife goes back to work – it is the latter approach that enables men and women to become equal in terms of caring responsibilities in the future.”

Tovey agrees gender balance in the workplace should not just be a ‘women’s problem’ as both male and female leaders have a role to play in improving industry standards. She adds that “a big part of this comes down to supporting both men and women with young families as this is one of the key pillars to retaining talent and crucially, to tackling gender equality”.

Beyond the obvious

Both Tovey and Kotecha say another key to help retain talented female real estate lenders is supporting women who have taken career breaks to return to work. In 2018, Aviva Investors introduced a return-to-work programme for those that have been out of the investment sector for 18 months or more.

Kotecha says: “This aims to support women that have significant amounts of skill and experience, and this is incredibly valuable – this is a huge opportunity for companies that is currently not being explored. To help change the situation, companies need to look beyond the obvious.”

“You see men taking [parental] leave, but it varies in terms of what that really means”

Stefanie Hanstveit
Wells Fargo

Like Shelmerdine, Kotecha is concerned that real estate finance companies are retreating from hybrid policies. “I see many lenders with staff in four or five days a week but to have a truly diverse company then flexibility needs to be accommodated for both men and women as traditional roles evolve. Our clients want to see diversity because it shows we have the right values but not only that: the benefits of diversity are clear for improving culture, decision-making and ultimately, improving profitability.”

Kotecha cites reverse mentoring schemes as another way to encourage conversations that can break down biases.

The conversation about diversity is certainly present in the industry, despite the long road ahead. When the CREFC Women’s Network hosted its first event in summer 2022, 240 people signed up – more than double the amount expected by the founders.

“One of the first people who walked in was a 19-year-old straight out of an apprenticeship, who wanted a career in the industry. Next came a 60-year-old woman who’d had a long career in property lending and found retirement boring,” says Shelmerdine. “Fostering such a breadth of skill is exactly what the network is about.”

But Shelmerdine says supportive people exist all over the industry and have helped her own career in real estate finance, naming Royal Bank of Canada’s global head of real estate, Kathryn Ogden, and Patti Shugart, head of global corporate banking, as “inspirational and positive role models and sponsors”. “I have always had people championing me and helping me progress. This industry is different from other types of banking where there is much more focus on personal success and advancement. This is a collaborative industry that is able to open doors for others.”