REAL ESTATE - Drever Partners will have a first closing at the end of November for its apartment investment fund, Concierge Apartment Fund. The company is expecting that it will have raised $100m of the $250m of equity it’s hoping to attract to the fund.
Drever is getting commitments from a range of investors. This includes pension funds, foundations and endowments. The commingled fund will have leverage up to 65%.
The person leading the efforts to raise capital for the fund is Executive Director of Business Development Mike Oliver. He said, "This commingled fund will look to buy C and D quality apartments and improve them through a capital infusion and new management. We don’t think that there are many institutional investors buying these kind of apartments and there are a lot of properties that can be improved dramatically."
Most of the institutional capital is going after A quality apartments. The lesser quality assets are held by owners who haven’t put any capital into the properties for several years.
Oliver truly believes in this strategy. He said, "If I was still with my previous employer, we would have invested in the fund." Up until the end of last year, Oliver was the Real Estate Investment Officer for the Alaska State Pension Investment Board. The pension fund now goes by the name of Alaska Retirement Management Board.
The investment strategy is only to buy existing assets. These would be properties that are owned by distressed sellers. The properties would need some physical improvements made to the asset and better management.
The properties would be acquired in certain markets across the country. These would be from Washington, D.C. to Florida, to Texas, Arizona, California and north to Seattle.
Projected returns for the fund are net IRRs in the range of 13% to 16%. This yield factors in an average holding period of three years. Properties could be held longer or shorter depending on market conditions.
There is a three-year investment period for the fund. Drever doesn’t anticipate it taking this long to find the assets for the fund.