UNITED STATES - CB Richard Ellis Investors has completed its first ever entity level transaction and acquired a majority share in Atlanta-based apartment developer Wood Partners.
CB Richard Ellis is already a keen investor in apartments, but Vance Maddocks, chief executive of CB Richard Ellis Investors, told IPE Real Estate there is potential for improved demand as US residential housing slows.
"Vacancy nationwide is in the 5% range for this year and we expect rent increases of 1% to 2% on a real basis. There will be more demand with less people interested in buying single family homes across the country," said Maddocks.
"We believe that Wood Partners has a proven track record in the development and ownership of apartments in the Southeast part of the country. With our investment, they will now be able to grow the company into other parts of the country like the West Coast," he added.
The real estate manager felt it had to move into the entity level investing to reach it global investment goals for 2008 as CB Richard Ellis Investors expects to invest $15bn (€9.5bn) on a global basis for 2008: around 50% of this capital will be invested in the United States while the remaining half will be distributed globally.
"There would be no way we could invest this amount by acquiring properties one at a time in the range of $10m to $20m. We needed to think outside the box of just a little bit," said Maddocks.
CB Richard Ellis will be looking at other entity level deals in the future, and these are most likely to be with companies which own or manage one of the four main property types of office, industrial, retail and apartments.
Wood Partners will maintain its name in the marketplace and the company now owns 15,000 apartment units, located in Atlanta and other major cities in the US Southeast region.
The company has $3bn worth of projects in its future development pipeline, including the construction of another 20,000 units of class A properties.