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The recent completion of the $225 million Bath Club in Miami Beach, Florida, marks one more step in real estate developer R. Donahue Peebles’ plan to grow his company, Peebles Atlantic Development Corp. (No. 18 on the BE INDUSTRIAL/SERVICE 100 list with $202.9 million in sales).
The Bath Club features six already-sold oceanfront villas that started at $5 million apiece and 107 new tower residences priced between $1 million and $10 million, with an average selling price of $3.5 million, Peebles says.
Founded in 1926 as the Southeast’s first private bathing and social club, The Bath Club included members such as President Herbert Hoover and John Knight of the Knight-Ridder publishing empire. For years the club denied membership to African Americans and Jews.
Peebles became the first African American member in 1996. He reportedly purchased the property for $10 million in 1999 and began construction in 2003. The units feature 10-foot to 12-foot ceilings, floor-to-ceiling hurricane-strength windows, deep balconies, and private passenger and service elevators. The property includes a clubhouse and spa, concierge service, an outdoor pool, and a hot tub. The development is attracting a wealthy and, in some cases, high-profile clientele.
The completion of The Bath Club follows Peebles’ 2004 sale of the Royal Palm Hotel for close to $130 million — the highest price paid for a Miami Beach hotel. It also sets the stage for real estate projects in Palm Beach, Florida; Las Vegas; the Caribbean; and Mexico as well as possible forays into other businesses such as auto retailing and banking. Peebles, whose company was named BLACK ENTERPRISE Company of the Year in 2004, is changing the name of the company to The Peebles Corp. to better reflect the company’s diversification strategy.
“We are a national developer that has expertise in multiple products. And we’re not a large bureaucracy, so we have the flexibility of an entrepreneurial company,” Peebles says. “We’re receptive to other types of businesses. Real estate is not always going to be strong in every market.” Even so, Peebles is working on a luxury residential project in Detroit and a mixed-use residential project in Pacifica, California, 15 minutes from downtown San Francisco.
“We are diversified geographically and by product type,” he says. “Real estate is a cyclical business. The cycle runs on both product type and location.”
Peebles’ guideline for projects is that he needs to be able to get a 30% return on costs — so if a building costs $100 million to build, it needs to be able to sell for at least $130 million. Less experienced, hungrier people are willing to take returns in the mid teens, he says.
Peebles says he is particularly interested in banking. “The biggest challenge is that access to capital for us is much more limited,” he says. “African Americans are judged at a different standard.”