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S. FL-Based Family Office Investing $3-7MM Into Multifamily JV Equity
Based in South Florida, the multi-family office registered investment adviser (RIA) provides $3MM-$7MM limited partnership equity capital for value-add multifamily acquisitions and recapitalizations. They will consider transactions throughout the United States. While the capital they bring into transactions is LP in nature, the RIA takes a co-GP approach to their involvement in order to align interests. This family office is relationship focused. In addition to trying to find strong investment opportunities, they are also trying to identify multifamily sponsors and operators they can grow with to complete multiple transactions a year.
If this capital source may be of interest, book a call to discuss a potential capital arrangement.
| Capital Type | Joint-Venture Equity |
| Geography | Nationwide: relatively agnostic to location but tends to stay away from tenant-friendly states where the eviction process may pose investment risk. Preference for properties located in the Sun Belt region. |
| Property Types | Multifamily-related asset classes, including Market-Rate Housing; Independent Living Communities; and may consider Short-Term Rentals; Affordable Housing; Manufactured Housing Communities and Student Housing. Will not consider for-sale asset classes such as condominium projects. |
| Use of Funds | Acquisition; Recapitalization; Renovation Costs; Interest Reserves; Sponsor Fees. Flexible with sponsorship fees and general permits all productive uses of capital. |
| Construction | Capital expenditures for existing assets only |
| Mixed Use | Will consider commercial space that conforms to agency lender policies. |
| Sponsorship | Willing to consider “move up” sponsors who have substantial experience. Sponsors must be able to demonstrate that they will be able to execute the business plan based on their track record. |
| Check Size | $3MM to $7MM |
| Sponsorship Equity Contribution | Usually look to see 10% of the equity requirement contributed by the co-GP. The investment group will provide up to the remaining 90% of required equity. |
| Targeted Return | Targeted 16-24% gross IRR as determined based on the risk profile of the transaction. |
| Distribution Waterfall | Typically, 8-12% preferred rate of return, pari-passu, followed by a 60/40 split to the GP. The group will look to retain up to 35% of the GP compensation, including acquisition fees, prorated based on the equity they provide vs. the total equity raise. May also consider preferred equity with a priority return of capital, which could reduce dilution to the sponsor and potentially lower the required yield. |
| Investment Horizon | Targeting 3-5 years. However, may consider as long as 10 years, especially if the asset is class A in quality. |
| Underwriting Criteria | Seeking a double-digit cash on cash return upon stabilization. Will consider new construction acquisitions upon C/O. Preference for class-A quality properties, as they have recently become more cautious towards class C product. |
| Leverage Requirements | Flexible on LTV of the debt stack. Will consider loan assumption deals and deals with ground leases on the capital stack. |
| Closing Time Frame | Standard; 30-60 days |
If this capital source may be of interest, book a call to discuss a potential capital arrangement.
Read our last Capital Spotlight: Family Office Providing Non-Recourse Multifamily Construction Loans