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Double Bottom Line Funds: Successful Private Equity Funds to Revitalize Low Income Neighborhoods

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Los Angeles. San Diego. Sacramento. Portland. Miami ... 85 Million Genesis LA Real Estate Fund I. Managed by Shamrock, the Disney Family Fund Manager ... – PowerPoint PPT presentation

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Title: Double Bottom Line Funds: Successful Private Equity Funds to Revitalize Low Income Neighborhoods


1
Double Bottom Line Funds Successful Private
Equity Funds to Revitalize Low Income
Neighborhoods
  • 2005 MetroBusinessNet Annual Convening
  • Miami, Florida
  • February 17-18,2005
  • Belden Hull Daniels, President CEO
  • Economic Innovation International, Inc
  • www.economic-innovation.com

2
What are Double Bottom Line Initiatives and Funds?
  • Regional Initiatives oversee Private Equity Funds
  • 3 billion managed by proven fund managers
  • Upper quartile private equity returns attract
    investors
  • Double Bottom Line Funds
  • Pull growth back into the urban core
  • Fully redeploy inner city infrastructure
  • Fund mixed-use, mixed-income and job generating
    projects
  • Generate large scale job, wealth community
    impacts
  • Two Bottom Lines
  • The First Bottom Line upper quartile market
    returns for investors
  • The Second Bottom LineThe Three Es Sustainable
    E1conomic Development Social E2quity, and Sound
    E3nvironmental impact.

3
Double Bottom Line Initiatives Funds have
unique qualities
  • Regional Initiatives link low income areas to the
    larger region
  • Low income areas only prosper by exporting to the
    larger region
  • Regions can only prosper if low income areas
    prosper
  • Large Scale makes a substantial impactBillions!
  • Private Market Discipline drives the Initiatives
    and Funds
  • Double Bottom Line DNA is deeply embedded in the
    Funds
  • Successful Fund Managers profit by recognizing
    and addressing market failure
  • Initiatives measure and report success with both
    bottom lines

4
Double Bottom Line Funds Focus Investments in
  • Mixed-use commercial, industrial housing
    projects
  • Affordable and mixed-income housing
  • Urban infill and brownfield cleanup
  • Transit-oriented development
  • Job and wealth creating business ventures
  • Profitable investment for developers and
    investors
  • Measurable job and wealth for community residents

5
Double Bottom line Funds Are
Capitalized to Succeed
  • Private equity produces higher returns by
  • capitalizing on market imperfections
  • Proven, incented private management
  • High investor returns are appropriate to risk
  • 3 billion invested by banks, pension funds,
    insurance companies, foundations, endowments and
    others
  • Community sponsors oversee most funds
  • Close working relationship with the public sector

6
Double Bottom Line Funds Use Private Market
Discipline
  • Fund managers chosen in competitive process
  • Investors community involved in selection
  • Fund managers protected by firewall at risk
  • Accountability to community stakeholders
  • Sponsors participate in economic returns

7
Successful Fund ManagersFind Fix Market
Failure
  • Low Income Neighborhoods are Not Disadvantaged
    They are Domestic Emerging Markets!
  • They have
  • The nations only untapped labor force
  • Vast untapped disposable income to buy
  • Large tracts of underappreciated land close to
    the Central City
  • In place, and often underutilized,
    infrastructure.
  • Successful Fund Managers address these market
    failures for the benefit of both investors and
    community stakeholders
  • Private Equity Funds only make money when
    they find and fix a
    market failure
  • Community Stakeholders reap the jobs, wealth and
    community revitalization from success as a
    domestic emerging market.

8
Double Bottom Line Funds Investors Appreciate
Returns
  • Banks like CRA credit plus high returns
  • Insurance industry likes avoiding CRA plus high
    returns
  • Public Pension Funds like DBL plus high returns
  • Foundations like high corpus returns, not low PRI
    returns
  • Faith based investors slow to come on board
  • Corporations high net worth individuals are
    joining

9
Double Bottom Line FundsCapitalize Strong Demand
10
Not a just a Fund a System! Funds I II III
Genesis LA Real Estate Funds
11
Double Bottom Line Funds have exploded across
the US
Puget Sound
Portland
Coastal Maine
Boston
New York
Sacramento
Philadelphia
Bay Area
Baltimore/Washington
St. Louis
Los Angeles
Albuquerque
San Diego
Shreveport
Miami
12
Not Just a Fund A Family of Funds!
Genesis LA Not-for-Profit
Real Estate Fund I 85M
Real Estate Fund II 150M
Workforce Housing Fund I 60M
Business Equity Fund I 30M
Shamrock
Shamrock
Fulcrum
Phoenix
13
Many ModelsGenesis LA Family of Funds
  • Genesis LA Not-for-Profit oversees the Funds
  • 300 Million currently under management
  • 1.5 Billion in deals generated
  • 85 Million Genesis LA Real Estate Fund I
  • Managed by Shamrock, the Disney Family Fund
    Manager
  • Returns far above promised high teens
  • Success in first fund leads to 150M Genesis LA
    Fund II
  • 150Million Genesis LA Real Estate Fund II
  • Now being built because of success of Fund I
  • 60Million Genesis Workforce Housing Fund I
  • Managed by Phoenix Realty
  • Supports workforce housing in LAs urban core
  • 30Million Business Equity Fund I
  • Invests in minority entrepreneurs in LMI
    neighborhoods

14
Many Models217Million Coastal Enterprises
  • 53M Coastal Enterprises, Inc.the NFP parent
    owner
  • 25-year-old broad based CDC
  • Over 1,000 loans and investments in coastal Maine
  • Deal flow micro loans, subordinated term loans
    venture capital
  • 25M CEI Ventures, Inc.wholly owned for-profit
    mgt firm
  • 5.5M Coastal Ventures Fund I
  • 20M Coastal Ventures Fund II
  • Similar Subsidiary Structures for
  • CDFI 10M CEI Community Ventures Fund
  • NMTC 129M CEI Capital Management

15
Many ModelsMassachusetts Life Initiative
  • 1997 Massachusetts CRA Insurance legislation
  • Community Advocates/Legis Oversee Funds
  • 100 Million Massachusetts Life Initiative
  • Totally funded by Mass Life Insurance Industry
  • Invests with CDCs and Housing Associations
  • 100M already invested starting 2nd cycle
  • Based on 25 yr, 500M MCRC 18,000 jobs, 60LMI
  • Real value not , but capacity building
  • 80M Massachusetts PC Initiative

16
Many ModelsAmerican Ventures
  • South Florida Urban Initiative Fund
  • 30M first closing 75M final closing
  • Focuses on Miami-Dade, Broward Palm Beach
  • dense development
  • mixed-use, mixed-income
  • transit-related developments
  • Knight Foundation initiated process
  • Investors include Citicorp, Wachovia, Knight
  • Albuquerque Urban Initiative Fund
  • Other regions in negotiation
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