UNITED STATES- ING Clarion Partners has shown its belief in the comeback of the real estate market and made its first acquisition in over two years for the Clarion Development Ventures III commingled fund.
The real estate manager has paid $20m (€14.6m) in cash for the 266-room Sea Crest Resort & Conference Center in Falmouth, Massachusetts, according to Doug Bowen, manager director for ING Clarion and portfolio manager for the commingled fund.
"This deal shows that properties can be acquired at some very attractive prices. The same deal was under contract to another buyer about 18 months ago for three times what we paid for it. The price that we got represents the value of the 23 acres of land that the property sits on. That is why we are stepping up the investment activity for the fund," said Bowen.
ING Clarion now has several other deals in the pipeline such as the repositioning of a residential complex in New York City, an apartment deal in Boston, a value-added deal on a shopping centre in Los Angeles and a preferred equity investment in an existing hotel.
The firm had not made an investment for the fund since it closed the capital raising in August 2007 and bought a $12m equity investment in the development of a Redmond, Washington office building.
ING Clarion decided not to invest capital until the prices became more attractive. But to do this, it had to ask its seven institutional investors in Development Ventures III for an extension of the investment period, and subsequently achieved the agreement.
The earlier capital raising has an investment period expiring in August 2010 but this was extended to August 2011, according to Bowen.
"We are pretty confident that we will be able to invest the remaining portion of the capital in that time period," he said.
A total of $203m was raised at the time, including a $50m contribution from New York State Teachers Retirement System.
Investors are anticipating 13-15% IRR net while the average holding period for assets in the fund should be three to four years.
The investment plan on the fund is buy properties with cash and add debt of 50-65% to them at a later date.