“Hardest project in my career to capitalize”: Diversity fund proves tough test for Peebles

Planned $500M fund to support minority and women developers hasn't drawn investors

National /
Aug.August 27, 2021 06:45 PM
Don Peebles (WikiMedia / Photographer Polo Sivori)

Don Peebles (WikiMedia / Photographer Polo Sivori)

More than two years after Don Peebles launched a $500 million fund to support minority and women developers, he has had little success so far garnering support from investors.

The developer launched a fund in June 2019, aimed at projects ranging from $10 million to $70 million throughout the country. The fund intends to help established developers as well as those just starting, aiming at multifamily and commercial projects in New York, South Florida, Los Angeles and the Bay Area,
Philadelphia, Boston, Washington, D.C.; and Charlotte, N.C.

Peebles initially estimated the fund would start deploying capital by the end of 2020. That deadline was pushed to the second quarter of 2021. Now Peebles says he’s hopeful the fund will see some closings in the fourth quarter.

“This has been the hardest project in my career to capitalize, and it is one that has been surprising,” said Peebles, who founded and leads his firm, Peebles Corp. “But we’ll get there.”

Part of the challenge, he said, is resistance from potential investors who lack a sense of urgency and are wary of risk. He has been focusing on public employment pension funds to raise capital, which Peebles said are generally conservative about the kinds of investments they make.

Pension funds usually gravitate toward existing assets, though some have become increasingly interested in ground-up development. Some have been hesitant to dive into development, let alone with first-time builders, he said.

Still, Peebles said he is engaged with half a dozen public pension funds and a couple of banks and remains optimistic the fund will reach its target, now $450 million. Peebles added he is committed to raising the capital, given he has criticized the real estate industry for its lack of diversity, and hopes the effort will inspire funds with similar goals.





    Related Articles

    arrow_forward_ios
    A rendering of the proposed office building and Michael Shvo (Kobi Karp, Shvo)
    Michael Shvo plans second Miami Beach office project
    Michael Shvo plans second Miami Beach office project
    Don Peebles, in partnership with former Miami Beach Mayor Philip Levine and developer Scott Robins, wants to build a six-story office and apartment building on a city-owned parking lot (Rendering courtesy of 1664 Meridian Ave General Partner LLC)
    Miami vs NYC: A developer’s guide
    Miami vs NYC: A developer’s guide
    Don Peebles and Barry Sternlicht with renderings of proposals to develop city-owned property in Miami Beach (Starwood, Integra, Comras JV, Polo Sivori, CC BY-SA 4.0 via Wikimedia Commons, Getty)
    Miami Beach voters to decide on controversial Peebles, Sternlicht office projects near Lincoln Road
    Miami Beach voters to decide on controversial Peebles, Sternlicht office projects near Lincoln Road
    Starwood's Barry Sternlicht and Don Peebles III (Getty, Starwood, Integra, Comras JV)
    Miami Beach gives green light to controversial Peebles, Sternlicht office projects near Lincoln Road
    Miami Beach gives green light to controversial Peebles, Sternlicht office projects near Lincoln Road
    Don Peebles and Barry Sternlicht with renderings of proposals to develop city-owned property in Miami Beach (Starwood Capital Group, Integra Investments, Comrass Company, Wikipedia, Getty)
    Miami Beach gives preliminary OK to controversial Peebles, Sternlicht office projects near Lincoln Road
    Miami Beach gives preliminary OK to controversial Peebles, Sternlicht office projects near Lincoln Road
    From left: Michael Swerdlow and Don Peebles along with a rendering of Block 55 in Miami's Overtown neighborhood (The Peebles Corporation, Swerdlow Group, iStock)
    Don Peebles on the hook for $800K in legal fees tied to Overtown lawsuit
    Don Peebles on the hook for $800K in legal fees tied to Overtown lawsuit
    Don Peebles, Michael Swerdlow and a rendering of the development (Black 55)
    Don Peebles drops remaining $160M claims tied to Overtown development lawsuit
    Don Peebles drops remaining $160M claims tied to Overtown development lawsuit
    Peebles loses $15M claim tied to allegations he was duped out of Miami Overtown project
    Peebles loses $15M claim tied to allegations he was duped out of Miami Overtown project
    Peebles loses $15M claim tied to allegations he was duped out of Miami Overtown project
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...