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Strategic Investment Fund Partners has raised $34.1 million from existing investors, the first close on a new fund that is expected to be completed by year-end.
The Regional Industrial Development Corporation of Southwestern Pennsylvania has been retained to manage the fund. RIDC will identify projects, perform underwriting, recommend investments to the SIF board and provide oversight of investments. It has also agreed to invest 10% of the amount ultimately raised, up to a $5 million limit.
SIF, created by the Allegheny Conference on Community Development in 1996, is a private sector source of gap financing for real estate projects in southwestern Pennsylvania with the potential to revitalize communities. The investors are a combination of corporations and foundations. It previously pumped an aggregate $171.2 million into 67 projects.
The new fund is its third; a target or goal was not disclosed. The first, in 1996, was capitalized at $40.3 million and the second closed in 2002 with a pool of $29.7 million.
“SIF investors are stepping forward to provide critical financing for catalytic projects that can transform communities,” David Malone, SIF board chair said in a prepared statement. Malone is chairman and CEO of Gateway Financial Group. “Building on a foundation that has had a meaningful impact downtown and in other neighborhoods, SIF is now moving ahead, leveraging the experience of RIDC, and planning to provide support for catalytic projects across the Pittsburgh region.”
The type of gap financing SIF provides is intended to bring projects to fruition that have other sources of financing but would be unable to move forward without the additional investment from SIF. The flexibility SIF offers makes new and innovative projects more feasible in 12 counties: Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Indiana, Lawrence, Mercer, Somerset, Washington and Westmoreland.
Projects must align with one of the following strategic criteria:
- Regional Cores Investment Strategy: Support regional downtowns by maintaining quality office space, converting vacant buildings, and investing in desirable amenities for workers, residents and visitors.
- Research & Development Led Industry Strategy: Develop properties integral for the growth of research and development driven companies.
- Strategic Site Acquisition Strategy: Provide purchasing power when certain projects advance SIF’s goals and other strategies.
- Innovation Strategy: Remain flexible and responsive to projects that further SIF’s mission and objectives as the regional economy evolves and new opportunities present themselves.
“Southwestern Pennsylvania is a regional economy and projects across the region can have a region-wide catalytic effect, attracting businesses and creating jobs for our communities,” Donald Smith Jr., RIDC president, said in a prepared statement. “SIF’s new regional strategy is an important tool for bringing projects to reality and building economic momentum.”
The Allegheny Conference will continue to be the point of contact for investors and general administrative support.