REAL ESTATE – Major manager RREEF has formed a joint venture with Bainbridge Capital, LLC to invest in apartment complexes in certain markets across the US.
There is no set amount of capital that has been allocated to the venture. Transactions will be considered on a case-by-case basis. The two companies are actively evaluating new opportunities and are optimistic that they will expand the JV this year.
Managing director Benjamin Young, who is involved in setting up the venture for RREEF, said: "Our goal here is to capitalise on the growth trends in the multifamily sector, as well as to partner with a strong operating partner with a proven investment track record."
RREEF is the main equity source for the venture. Bainbridge Capital is the operating partner and will try to find transactions for the relationship.
There has already been one transaction completed for the venture. This is a portfolio of six apartment complexes totaling 2,100 units, located in key mid-Atlantic metropolitan areas.
RREEF likes the demographics of where the assets are located. Young said: "We think that the multifamily market on the East Coast appears poised for growth over the next several years. This is especially true in light of the affordability gap between renting and home ownership in key markets."
The portfolio that RREEF and Bainbridge now own will be improved. Young said, "We have budgeted over $15m(€11.4m) for upgrades across the portfolio.
"It will include capital items such as roof and HVAC unit replacements as well as cosmetic improvements like landscaping and common area upgrades. We will also refurbish select units with new flooring and fixtures where appropriate."
The JV will be focusing on investing in apartments where Bainbridge has existing platform relationships. For now this means the mid-Atlantic States and Florida. The venture will not rule out expanding the footprint for the right opportunity in a high barrier-to-entry market.
RREEF has committed to invest in the JV on behalf of its commingled fund, RREEF Real Estate Opportunity Fund II. The pension fund manager finished off money raising for the fund last October with a total equity raise of $1.6bn.