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 support 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.
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