REAL ESTATE – In the US, Great Point Investors will be expanding into the commingled fund real estate business for the first time with its Great Point Value Fund.
Principal Gary Schwandt said, "It’s our opinion that most pension funds and consultants in the US now have a preference for commingled funds. There just are not that many separate account searches happening. For us to grow our business, we felt it was necessary to start a commingled fund."
Great Point Investors has always been known as a separate account real estate manager. Some of its more significant clients are Ohio Public Employees Retirement System and Stanford University. Schwandt said, "We are not counting on Ohio PERS to be in the commingled. We value them as a major separate account client for our company."
Great Point figures that the marketing for the commingled will be started in the first part of February. The private placement memorandum for the fund is being put together currently.
The total equity raise for the fund is $200m(€155m). Pension funds and other institutional investors will be targeted for the fund. Great Point will be a co-investor in the fund for 1% of the total equity raise.
There will be 60% leverage placed on the fund. There will give it a total capitalisation of around $500 million. The projected returns for the fund are a gross IRR in the mid teens. This yield is based on a three- to five-year holding period. The commingled fund will have a seven-year life.
The Great Point Value Fund will be investing in value-added office building transactions. In some cases this will mean placing equity into new development projects. In others, it will involve buying existing properties that can be improved with a new leasing or management strategy.
Great Point will be looking to invest in many markets around the US based on research done by Torto Wheaton. These areas include Boston, Washington, DC, Phoenix and Southern California.
Most of the deals for the fund will be in the range of $15-$30m. There will be no pre-specified assets in the commingled fund.