UNITED STATES - Buchanan Street Partners has shifted its business to focus solely on acting as a principal investor for all of its real estate investments.
Around a third of the company's time was spent over the past year dealing with investment sales, brokerage services and a self-storage discipline, but these duties are now being ceased according to Robert Brunswick, president and chief executive officer of Buchanan.
"We want to be more of a provider of debt and equity in the marketplace because there is a lack of sources that now exists for both kinds of real estate investments."
There are few active financing sources at present as much of the equity capital is now sitting on the sidelines while investors wait for the financial markets to calm a little.
Buchanan hopes to move into real estate debt either by buying notes or by providing financing to new acquisitions as officials at the firm confirmed: "We have recently bought our first couple of mortgage notes and we will be doing more of this [business] in the future. Our first goal with this strategy is to achieve an attractive risk-adjusted return and if the asset runs into financial problems, we would have the personnel at our company to takeover the asset."
The type of financing Buchanan hopes to provide is through whole loans and mezzanine debt, though Buchanan will still be involved in buying properties or investing equity in new development projects in the office, industrial, retail and residential markets.
The real estate manager is expecting to make these investments for its commingled fund as well as for separate account pension fund clients.
One of Buchanan's more recent deals was the acquisition of the 322-unit Pegasus Apartments in downtown Los Angeles which saw CalPERS make a $15.7m investment into the property - represented 90% of the acquisition's equity cost - via its separate account deal with the firm.
CalPERS is projected to receive net IRR of 16.9% and the property is expected to be sold within three years.