Assuming equity check sizes starting at $10MM up to $40MM.
In speaking with most of the name brand equity groups out there doing multifamily (i.e. Blackstone, Ares, Carlyle, JP Morgan, Westbrook, Life Insurance Companies, etc), most of these groups are not interested in doing older vintage, non-9 foot ceilings, etc etc. Basically they want 90's and newer vintage value-add or core-plus, at least from what I am seeing. And very location sensitive, i.e. even in prime markets such as Seattle, they want to be buying an asset that is would house Amazon or Microsoft workers, as an example.
That being said, there are many assets which aren't core locations, or built pre-1985 with 8 foot ceilings that still offer very compelling returns. Many of these are sizable assets that require $20M+ of equity, certainly large enough check sizes for the funds I mentioned above, or similar funds.
Assuming most of those equity players won't get comfortable with those deals, who or what is the next logical and likely source of equity who is ok buying the older grittier asset? It looks like most buyers are either funds (discretionary capital, no need to raise JV equity), larger private investors who can write the check themselves, or ?
My firm has been trying to convince LP capital to invest on these types of assets, and literally been shot down by every "name brand" equity group. My belief is we are targeting the wrong type of equity, if they want newer vintage they will never get comfortable buying 70's vintage. That being said, I'm not sure who the RIGHT groups to talk to are, or if trying to raise JV equity on these types of assets is a futile effort.
Any thoughts?
Bridge Investment group? Bridge partners? Carmel Partners? GTIS partners? There are so many on the goog just google them
Are you just going through relationships? Maybe it’s time to reach out to a capital markets guy.
Around $10mm is a bit of an awkward check size for true LP money - you almost want to see if you can go friends and family or find a smaller family office and cut a better deal.
Which market?
This is misleading. There are DEFINITELY funds that would provide LP equity on this kind of product . You just need to target them better given the risk/reward-profile that a specific deal has. If you call up an opp fund and say that you want to buy a class B multi product and inject $5-10K per unit in capex (granite countertops, stainless steel appliances, clubhouse, etc.) to achieve whatever rent bump, they're probably thinking it is a low teens return type deal which isn't hitting their target returns. Other firms have lower cost of capital priced for these type of deals. Go find them.
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