Real estate entrepreneur, author and political activist Don Peebles plans to launch a $500 million investment fund for minority and women property developers in markets where his firm, Peebles Corp., operates.
He made the announcement on Friday during TRD’s annual Los Angeles residential real estate showcases, where he moderated a panel on diversity, according to the Real Deal.
An advocate for diversity in the real estate industry, Peebles said access to capital has been the biggest challenge for minorities and female developers. “I looked at how to address that for a number of years,” he said. “No one in the country is doing this on a national level.”
The fund will focus on urban infill projects — an urban planning term for rededicating land in an urban environment to new construction. A kind of “land-recycling,” infill has been promoted as an economical use of existing infrastructure and a remedy for urban sprawl, according to the Handbook of Urban Economics and Planning. Its critics view it as overloading urban services, increasing traffic congestion and pollution, and decreasing urban green-space.
“It’s a very positive thing to have the developments that are taking place in communities of color, to have the projects be developed by people of color,” Peebles said. “We see this as a win-win and an untapped market.”
Sixty projects will be targeted for funding, ranging from $10 to $70 million, including commercial and multifamily projects. The emphasis is on projects that offer affordable housing, TRD reported.
Peebles said he anticipates the fund will consist of a small group of investors. He is talking to global banks and other financial institutions to invest in the fund, though he did not identify them.
The fund will invest in projects in South Florida, New York City, Los Angeles, Boston, Washington D.C., Philadelphia, and Charlotte.
The Peebles Corporation is the largest African American-owned real estate development and ownership company in the U.S., according to Forbes.
Peebles is the founder, chairman and CEO. The firm has a multibillion-dollar development portfolio of luxury hotels, high-rise residential and commercial properties. In 2015, Forbes estimated Peebles’ net worth at $700 million.
In addition to supplying capital, Peebles said his company will help support emerging developers through co-developing or partnerships that help mitigate risk and help them grow quicker.
“The idea is to create this business model that shows that investing in emerging developers and investing in diversity will result in higher returns with less risk,” Peebles said.
Peebles is an urban renewal specialist with a penchant for public-private partnerships. No other company has successfully realized more real estate development through public-private partnerships, according to the company’s website.
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Peebles’ longtime goal has been to empower people who were historically cut off from capital, Real Estate Weekly reported. Peebles was among the first and most prolific developers to announce his interest in a federal initiative that offers tax relief in exchange for investments in designated Opportunity Zones.
In 2018, Peebles announced that he was creating a Qualified Opportunity Fund to invest in low-income areas across the country.
“Hopefully, this could result in greater diversity in the development business,” Peebles said. “More minorities who’ve had extremely difficult times getting access to capital and women developers who’ve had a very difficult time breaking into a male-dominated field.
“The reason these zones are there is because they haven’t been serviced by the private sector,” Peebles said, “so hopefully this results in smaller entrepreneurs having access to capital.”
The appeal of the Opportunity Zone program is two-fold, Real Estate Weekly reported:
Owners of appreciated assets can liquidate their holdings then roll the proceeds into an Opportunity Fund, which will then invest in designated areas.