In this week’s Insights Post we wanted to share with our readers an update on one of our favorite institutional equity programs. This group is based out of the northeast but they have a local office in the Los Angeles area where they source their west coast investments. The group has been in business for over 25 years and has invested close to $30 Billion in Joint Venture Equity, Preferred Equity, Mezzanine Debt, and senior debt. The firm is 100% focused on real estate and related assets and we sat down with the team leader of their west coast office to see what they were looking to do in 2024. This is what they said…
Right now, they have $300 million left to deploy in 2024 within their fund. They think they will see a lot of preferred equity and mezzanine debt investment opportunities based on pending loan maturities in the market. They recently made a preferred equity investment into a hotel that needed funding to complete construction, which is also a theme they think they are likely to see more of.
In addition to deals like that they are generically looking to invest JV Equity with local sponsor/operators in value add multifamily and small bay industrial transactions.
Value Add Multifamily Investment Characteristics:
- Growth markets, predominately in the southern US
- 200+ unit count minimum
- Preference for 1990’s vintage construction or newer. They will consider older product on a select basis.
- Construction / renovation / reposition / repurpose business plans or distressed / special situation investment business plans are of the most interest
Small Bay Industrial:
- Infill locations near major transportation corridors in growth markets
- 100,000 – 250,000 SF multitenant projects with 20+ tenants. +/- 80-20 warehouse to office buildout
- Re-lease / lease-up / renovation / reconfiguration business plans are of the most interest
Generic Investment Parameters:
- 90/10 or 95/5 co-investment structures depending on deal size (the larger the deal the smaller the required sponsor co-investment) or preferred equity with participation kicker
- $10,000,000 investment size minimum, with an ideal investment size of more like $20,000,0000 although they will consider smaller investments on a select basis for sponsors that can demonstrate a pipeline of deal flow
- Mid-to-high teens IRR target for Pref/Mezz structures
- High-teens / low twenties IRR target for Joint Venture Equity
Please let us know if any of this capital is of interest to you. Hopefully it provides some general information for you that can help you keep tabs on today’s market.
About Schelin Uldricks & Co.
Schelin Uldricks & Co. is a firm offering investment banking services with a focus on providing capital solutions to real estate companies and other mid-sized businesses.
Headquartered in Huntington Beach, CA, Schelin Uldricks & Co. embodies a progressive entrepreneurial culture focused on integrity, transparency, execution, and ingenuity. The founding partners bring over 35 years of collective capital markets experience in investment banking, private equity, and real estate finance. The company offers a broad array of services, including debt and equity placement, M&A, GP advisory, divestitures, and financial restructuring.