Pinnacle Partners, JPI Announce $200M Workforce Housing Development Fund

Pinnacle and JPI will begin sourcing equity this year for projects that are either already under construction or slated to begin no later than the third quarter of 2025. 

Mollie Fadule, chief financial and investment officer at JPI, told CO that JPI’s 35-year business model has typically eschewed a fundraising mechanism and has instead funded projects through programmatic joint-venture equity that focuses on smaller, individual construction deals. 

“In recent years, we found a number of our investors were interested in the fund structure with a diversified asset base, and we also recognized the huge need for affordable housing in the U.S.,” she said. “The strategy here is to offer to our existing, and new, investor base the opportunity to invest across a broad spectrum of geographically diverse workhouse housing.” 

JPI has a 35-year track record of developing more than 117,000 multifamily homes representing a total value of $26 billion. 

In a statement, JPI CEO Payton Mayes said his firm recognizes that homeownership in the U.S. is now “increasingly out of reach,” and that JPI is ready to meet the demand for “high-quality rental options that serve middle-income households” by creating “lasting value” in those markets.

As the firms raise the $200 million, the fund will finance at least four projects: a 295-unit community of four-story, garden-style apartments in Oceanside, Calif.; a 224-unit, eight-story development near the Microsoft Corporate Campus and the East Link light rail station in Redmond, Wash.; a 415-unit development in Denton, Texas; and a 393-unit development in McKinney, Texas, a suburb of Dallas. 

Leo Backer, managing partner of Pinnacle Partners, said in a statement that each of the four  markets have shown good job growth and strong economic conditions in recent years, making the investment attractive. 

“These favorable conditions, combined with the significant demand due to an unprecedented housing shortage, offer strong investment opportunities,” said Backer.  

Jeff Feinstein, a managing partner at Pinnacle Partners, told CO that the negotiations behind this fundraise strategy with JPI go back five years. He added that the $200 million fund will source capital from ultra high-net-worth individuals, family offices, institutional investors and retirement annuity firms at quarterly closes throughout 2025.   

“We work with best-in-class developers, wherever possible, in the markets we choose to invest in,” he said. “We have already funded over 900 units of workforce housing, and we want to deliver more workforce housing through tax-advantage solutions and have been pioneers in opportunity zone legislation.”

Feinstein added that the fundraising strategies of other firms is occasionally “blind pools,” in which the capital is sourced and committed before the developments have closed. In the case of the Pinnacle and JPI fund, the redevelopment is already underway and the joint venture has “taken a lot of the risk off the table — everything is shovel-ready,” according to Feinstein.

“With JPI’s excellence in development … they can actually deliver a lower cost, better return profile, probably better than anyone in the country at this moment,” he added. “That makes for attractive rates of return as many investors are seeking an impact wherever possible with their investment dollars.” 

Because of the demand for more workforce housing across the United States, Feinstein added that he expects federal, state and local governments could soon offer tax programs to encourage this type of fundraising and construction of lower-income and middle-income housing near worksites. 

“We’re expecting there could be federal support and incentives for this type of housing to be delivered,” he said. “Local jurisdiction could include property tax abatement at state, federal and local level that could make this an attractive endeavor.”

Brian Pascus can be reached at bpascus@commercialobserver.com