by Derek T. Dingle
Over 45 days, BLACK ENTERPRISE shares 45 milestone events among the nation’s largest black-owned businesses that have had widespread impact on black economic development and American industry across four decades. This is in tribute to the 45th anniversary of Black Enterprise’s iconic BE 100s yearly list of the largest black-owned companies.
Today we reveal No. 34 in the web series “45 Great Moments in Black Business.”
2004: R. Donahue Peebles makes history in 2002 when his BE 100s real estate firm completes development of Miami Beach’s Royal Palm Resort, the nation’s first black-owned luxury resort. Two years later, he sells the property for a record $127.5 million.
When BLACK ENTERPRISE covered him in June 2004, he was dubbed “The Prince of South Beach”—and for good reason. He had control of the 417-unit Royal Palm Crowne Plaza Resort in Miami Beach—the first black-owned luxury resort in the nation—and his company, Peebles Atlantic Development Corp. had amassed a $500 million real estate portfolio and demonstrated a pile-driving 141% revenue growth in a year due, in part, to its focus on “on the red-hot South Florida luxury real estate scene.” As a result, the company was named BE’s Company of the Year. (Today, The Peebles Corp. ranks No. 35 on the BE Top 100 with $102 million in revenues.)
To fully appreciate his deal-making prowess and phenomenal payout, one must review its dynamics. Here’s the blow-by-blow account as reported by BE‘s then-Features Editor Alan Hughes some 13 years ago:
While on vacation in Miami Beach with his wife, Katrina, and their then-infant son for the 1995 New Year’s holiday, Peebles came across an article that would reshape his business. “I was reading the paper, and there was a story in The Miami Herald about how South Beach had grown and the real estate market is on fire, and they gave an example of the Shorecrest Hotel that was owned by an investor who paid $900,000 two or three years ago and was now selling it for $5 million,” said Peebles. “And they said it was next door to the Royal Palm Hotel that was owned by the city, which was looking for an African American developer.”
It was the first time Peebles had heard of a project reserved for a specific race. “So I said to myself, ‘How many African American developers are in this county? Not many. How many have the capacity to do a project of this size? Even fewer. And how many are reading The Miami Heraldright now? Probably not many.’ “
There was a reason for the set-aside. Several years earlier, prominent local attorneys H.T. Smith and Marilyn Holifield led a tourism boycott by African Americans, claiming city officials had snubbed South African leader Nelson Mandela when he visited because the former political prisoner made positive remarks about Cuban President Fidel Castro. Miami is home to the largest Cuban population in the U.S. This made the city, which was segregated until the mid-60s, a hotbed for political and social unrest.
As part of the 1993 settlement to end the boycott, which had cost the county an estimated $20 million to $50 million in lost convention business and tourist dollars, Miami Beach agreed to underwrite the development of a black-owned luxury hotel by putting up a long-term $10 million loan to acquire the property. But the deal stalled after four local African American would-be developers, known as the HCF Group, won the original bid but failed to secure additional financing for the estimated $60 million project. “Ultimately, in spite of H.T. Smith and other community leaders [urging] the city commission to reach a deal with HFC, the city commission terminated negotiations,” recalls Peebles.
When the Royal Palm deal came along, Peebles was familiar with both the real estate business and the politics of public/private partnerships. Even more important, he gained control of the Shorecrest Hotel, which would become a pivotal part of sealing the deal. When the city of Miami Beach issued its request for proposal for the Royal Palm, it was conditional on the development of the adjacent Shorecrest property. However, the city had earmarked $10 million to acquire both properties and used $5.5 million of those funds to acquire the Royal Palm, leaving insufficient funds in the budget to meet the $5.5 million asking price for the Shorecrest. Peebles’ earlier acquisition of that property turned out to be highly strategic, because any competing bids for acquiring and developing the Royal Palm had to include the Shorecrest.
The city received seven bids, mainly from major hotel chains that had partnered with African Americans to meet the 51% black ownership requirement. Each bidder was connected to a different hotel chain, including The Ritz-Carlton and Hyatt. Peebles partnered with Crowne Plaza Hotels & Resorts, hammering out a contract in which the hotel chain paid $6 million for the right to brand and manage the property.
The Hyatt team was named the top bidder by the city’s citizens’ selection committee, set up to make recommendations to the city commission. Peebles came in second, while Baltimore developer Otis Warren came in third. The three finalists were then invited to make presentations to the commissioners, but with the recommendation, Hyatt clearly had the edge.
Peebles knew politics was behind it all. “The city’s financial adviser had recommended us financially; we had three loan commitments and nobody else had any,” he said. Peebles, however, had an ace in the hole: the Shorecrest property.
While he hired lobbyists to help him state his case, he personally developed relationships with city councilmen and pressed for their vote commitment. Peebles also had to contend with public opinion from many who thought he was getting a sweet deal because he was African American. Peebles is quick to point out that during that same time period, neighboring hotel Loews also received money from the city. Royal Palm received $10 million to build 400 rooms – some $23,000 per room – while the city invested $60 million in the 800-room Loews – or $75,000 per room. Loews also had 99 years to repay the loan versus 25 years for Royal Palm.
Peebles’ strategy paid off. Not only was there a national spotlight on Miami Beach and the plight of an African American developer, but he wooed the commissioners to vote in his favor. He emerged as the winning bidder in June 1996.
Elated at the time, his joy would be short-lived. Then-Mayor Seymour Gelber, who voted against the Peebles deal, assigned Arthur Courshon, a bank president and staunch opponent of Peebles, to negotiate the final contract. Talks dragged on for months while investors became impatient with delays and mounting expenses. Peebles had hoped to complete the project by year-end 1998—a hope that would quickly fade. Then he had to leap a hurdle with the city’s historic preservation program so Peebles could tear down the faulty structure but had to “build an exact replica of the original.”
When all was said and done, the project came in nearly two years late and costs totaled $82 million—more than $20 million over budget. The property celebrated its grand opening in May 2002. By 2004, the property had a year-round occupancy rate of approximately 70%.
Its completion was heralded throughout the African American business community. “It was huge because it was the first time in the history of this area where you had a substantial development owned by an African American going up on the beach,” said Andy Ingraham, president of the National Association of Black Hotel Owners, Operators & Developers Inc. “Let’s not forget it was not too far in the distant past when people like Muhammad Ali could fight and train on Miami Beach but could not stay on Miami Beach.”
Peebles would eventually become one of the wealthiest African Americans in the country, with an estimated net worth of more than $700 million and roughly $5 billion, 6 million square foot real estate portfolio. One of his first transactions after that historic development: Selling the Royal Palm for $127.5 million two years later.
—Additional reporting by Alan Hughes
Real estate developer Don Peebles discovered he had an interest in the hospitality business when he was very young. He was enthralled seeing his maternal grandfather work as a doorman for the Wardman Park Hotel in Washington, D.C. It also made him aware of all of the opportunities available in the hotel industry from a very early age.
However, he struggled seeing that women and minorities didn’t have equal footing in the industry. In 1983, Peebles decided the best way to create equal opportunities was to start his own business. He founded the Peebles Corporation, an investment and development firm that specializes in hospitality, real estate, and retail properties. The Peebles Corporation is currently working on projects in New York City, Boston, and Charlotte, and numerous developments in San Francisco, Washington, D.C., and Miami already line Peebles’ portfolio.
While the company has tended to focus on gateway markets, they’re also looking to work in developing ones. For example, Peebles is looking to build a district called “Brooklyn Village” in downtown Charlotte, N.C.—a location he finds very compelling. Peebles considers Charlotte an emerging city, and over the next 10 years he hopes to create a community of more than a dozen establishments. This includes two hotels and several residential and office buildings. If all goes according to plan, 18 acres should be approved for development in the next 12 to 18 months. “It’s a neighborhood within the central business district, so it gives us a unique opportunity to master plan and develop a neighborhood in a prime location in one of the most exciting growth cities in the country,” Peebles says. This particular piece of land is near Panthers’ Stadium and the Bank of America Headquarters.
The corporation is also planning to renovate the New York Life Insurance Company Headquarters in the Tribeca region of Manhattan, turning the landmark into a condominium with pre-war ornamentation. Peebles describes, “It’s a unique historic landmark building that has all the grandeur of something you would typically find on 5th or Park Avenue. It just happens to be in Tribeca. It represents a tremendous opportunity for our company.”
But development is only one of Peebles’ interests. Peebles became engaged in politics as a young teen in 1973 when Washington, D.C., was first granted the right to elect its own government officials. When he was in high school, Peebles served as a congressional page intern for the House of Representatives.
“Most real estate developers of scale tend to engage in some politics, just in terms of supporting good candidates and a good development profile,” Peebles says. But Peebles’ political involvement is fueled by passion just as much as it is by his real estate career. He became chairman of the Congressional Black Caucus Foundation in July 2015, and remains involved to this day. Peebles’ interest in politics, driven by his desire to create equal opportunities for women and minorities, was inspired by watching his mother’s difficulty acquiring the same opportunities and pay as men. “One of the things it allowed me to do is engage in a broader discussion nationally about equal access to economic opportunities for minorities and women and that’s something I feel very strongly about,” Peebles says.
Working with the Foundation has allowed Peebles to help open doors for individuals who may not have been available in the past—a step toward leveling the industry playing field. The Foundation provides scholarships for more than 300 students a year, which leads to congressional and private sector internships, providing educational experiences and opportunities to underserved children in minorities. Today, up-and-coming students are benefitting from the internship on Capitol Hill Peebles completed 40 years ago. He says, “What the organization stands for is fairness and what we all get is a fair and equal chance at access to our version of the American dream. That access to the American dream is deeply rooted in equal access to education, equal access to economic opportunities and—of course—equal protection under the law.”
As for what’s next? Peebles is considering running for mayor of New York City. His desire to run stems from a place of frustration—he’s looking to give the city’s women (52.5 percent of NYC’s population) and minorities (67 percent) equal access to opportunities. Peebles believes that without leadership invested in creating a state of equity, it’s never going to happen.
“The greatness of New York is that it’s the most diverse city in America, and everybody can live together in harmony and this is a city where everyone can pursue their dreams: Big, small, and in between,” he says. “If people can’t get a fair chance in New York City, where can they?”
New York mayoral wannabe Don Peebles met with president elect Donald Trump on Tuesday to discuss ways to advance minority- and women-owned businesses.
“The whole focus was talking about the future and how we can work together and advance our country with greater opportunities for African American and women entrepreneurs and minority owned businesses,” real estate honcho Peebles said.
“He was interested in how I achieved success and how I overcame obstacles and how this can be replicated. No one knows better how to overcome obstacles than the people who overcame them.”
Peebles said he was most impressed by Trump’s “openness, his willingness to listen, to consider innovative ideas and his commitment to creating an environment of equal opportunity.”
The duo also spent time talking about their “shared experiences,” as developers in New York and nationally, “and about being politically involved and caring about our country.”
“I talk his language and he talks mine, so we really understand each other,” Peebles said.
Peebles, a Democrat, who has been critical of Mayor de Blasio, said he’s considering making a run for City Hall.
Following the meeting, he said it’s time for disillusioned Hillary Clinton supporters to give Trump a chance.
“If people can get beyond the bitterness, sadness, frustration and anger of the election, if Hillary Clinton supporters can get over it and move on, then there is a real opportunity for New York and entrepreneurs,” Peebles said.
“This is the first time there will be a New Yorker in the White House since FDR. What a great thing that is for New York City,” he added.
He rapped de Blasio for complaining about traffic during hizzoner’s own meeting with Trump.
“A competent mayor should be able to handle the presence of the President of the United States.” he said.
“Lyndon B. Johnson said it best. In politics, there are no permanent friends or enemies, just permanent interests. We need to create equal economic opportunities for minorities and women. Donald Trump has expressed a strong commitment to doing that and I intend to do whatever I can to move that agenda forward,” Peebles said.
Leaders in Business and Government to Help Advance CBCF’s Mission and Growth
WASHINGTON—The Board of Directors of Congressional Black Caucus Foundation, Incorporated (CBCF) has appointed new officers and elected five new members at its Annual Meeting in February.
Four distinguished individuals at the pinnacle of government, private business and global media will serve as officers of the CBCF’s Board of Directors. Mr. R. Donahue Peebles, chairman and chief executive officer, The Peebles Corporation was appointed chair, and Rep. Sheila Jackson Lee, vice chair. Mr. Earle Jones, senior director of government affairs, Comcast, NBC Universal and Ms. Cathy Hughes, founder and chairperson, Radio One, will serve as secretary and treasurer, respectively.
Rep. Joyce Beatty, Janice Bryant Howroyd of the Act 1 Group, Rep. Brenda L. Lawrence, and Sharon C. Taylor of the Prudential Foundation were among the new directors approved by the Board. The directors represent a diverse set of expertise and backgrounds, from Fortune 500 companies to Congress.
“I am humbled to have been entrusted to lead the board of directors,” said R. Donahue Peebles, the newly elected chair of the CBCF board of directors. “I look forward to working with new and current members to build on the momentum the foundation has established as a prominent voice on public policy issues affecting African Americans.”
The new directors join the CBCF at a time of exponential growth with the expansion of the Leadership Institute education programs, the Executive Economic Summit series, and the Center for Policy Analysis and Research New Horizon Initiatives.
“Each new member of our board brings a wealth of public policy, business, and financial acumen from successful careers and service in government, Congress, and more,” said A. Shuanise Washington, president and CEO of the CBCF. “We look for exceptional individuals to strengthen our board’s expertise, and we are confident that our newly elected officers and directors will make significant contributions to the CBCF.”
The new officers of the CBCF board of directors are as follows:
Mr. R. Donahue Peebles is founder, chairman and chief executive officer of The Peebles Corporation, one of the country’s few national privately held real estate investment and development companies with a multi-billion dollar portfolio of projects in New York, Washington D.C., Philadelphia, Boston, Miami and Miami Beach.
Rep. Sheila Jackson Lee returned to the board in 2015, after serving for three years previously in from 2010 – 2013. Jackson Lee is also serving her eleventh term as a member of the United States House of Representatives from the state of Texas. She is currently a senior member of the House Judiciary Committee.
Mr. Earle Jones is the senior director, federal government affairs at Comcast NBCUniversal in Washington D.C. Jones has served in the cable telecommunications industry for more than 25 years. He is a member of the Comcast Federal Affairs Legislative team that successfully obtained federal regulatory approval for the Comcast/General Electric acquisition of NBCUniversal in January 2011.
Ms. Cathy Hughes is the founder and chairperson of Radio One. Inc., the largest African-American owned and operated broadcast company in the nation. It is the first African-American company in radio history to dominate several major markets simultaneously. Cathy Hughes is the first and only African-American woman to chair a publicly held corporation.
The new board members are as follows:
Rep. Joyce Beatty is serving her second term representing the 3rd Congressional District of Ohio. She serves on the Committee on Financial Services and is member of the Housing and Insurance and Oversight and Investigations subcommittees.
Rep. Alcee L. Hastings is serving his 12th term representing Florida’s 20th District. He is the Senior Democratic Whip, and a senior member on the House Rules Committee. He is also Co-Chairman of the Congressional Everglades Caucus and Co-Chairman of the Florida Delegation.
Janice Bryant Howroyd is the founder and CEO of the Act 1 Group, a multi-billion-dollar workforce solutions enterprise, which operates in 19 countries. In 2015, she received the Southern California Minority Supplier Development Council’s (SCMSDC) Leadership Excellence Award.
Rep. Brenda L. Lawrence is a Ranking Member on the House Oversight and Government Reform Committee’s Subcommittee on the Interior and a member on the House Committee on Small Business. She also serves on the Subcommittee on National Security; Agriculture, Energy, and Trade; and Contracting and Workforce.
Sharon C. Taylor is senior vice president, human resources, and chair of The Prudential Foundation. She is responsible for the oversight of Prudential’s Office of Corporate Social Responsibility and chairs both the Human Resources Policy and Investment Oversight Committees. She is a founding member of the company’s Black Leadership Forum.
ABOUT THE CBCF:
The Congressional Black Caucus Foundation, Incorporated, established in 1976, is a non-partisan, non-profit, public policy, research and educational institute intended to broaden and elevate the influence of African Americans in the political, legislative and public policy arenas.
By Damian Ghigliotty
Roy Donahue “Don” Peebles is getting ready to seal the deal on a $334 million construction loan from Bank of America to finance the conversion of 108 Leonard Street in Tribeca, Manhattan into luxury condominiums.
The financing is expected to close on Jan. 8, two people familiar with the matter told Commercial Observer.
The Peebles Corporation acquired the late 19th-century landmark—the single largest building ever sold by the City of New York—for $160 million in December 2013, according to one source with intimate knowledge of the deal. Goldman Sachs provided acquisition financing to Peebles for the purchase, public records show.
The developer later teamed up with the Israeli-based American real estate company Elad Group for the conversion project and tapped the international architecture firm Beyer Blinder Belle to lead the design efforts.
“Tribeca was one of the hottest markets in the city even back in 2012,” Mr. Peebles told CO in regards to the project in a November 2015 interview. “It was one of the early markets to recover and Downtown was very hot.”
The 419,000-square-foot property had once served as the headquarters of New York Life Insurance Company and more recently housed New York City Criminal Court.
Redevelopment plans for the 13-story building call for 151 new residential condo units, according to records filed with the New York City Department of Buildingsin July 2015.
The conversion of the landmarked building, which has an alternate address of 346 Broadway, will also include a 7,210-square-foot community facility and about 2,200 square feet of commercial space. Peebles and Elad had plans to include a boutique hotel in the building, but no details about the hotel appeared in the developers’ most recent filings with the DOB.
The project marks Mr. Peebles’ only active development in New York City.
Jordan Casella, a senior vice president on Bank of America’s commercial real estate banking team for the New York and New Jersey markets, led the $334 million construction loan on behalf of the lender, according to one of the two sources.
A representative for Bank of America declined to comment. Mr. Peebles could not be reached for comment in time for publication.