US - WP Realty has put together a new investment fund called WP Real Estate Investment Fund IV. There was a total equity raise of US$150m (€117m). One of the largest investors in the fund was BayNorth Capital Partners, which has many institutional clients like the Harvard University Endowment Fund.
Investment Fund IV is an opportunistic fund that invests in retail properties. WP Realty thinks that its contacts in the retail real estate industry will make the difference for them. Principal Bryan Weingarten said, “We have 50 people within our company that have the leasing, development and legal expertise that allow us to know what is going on with retail properties. This gets us access to deals and we will only charge one fee to the investors in our fund.”
The total capitalisation of Investment Fund IV will be around US$600m. This will be achieved by having a debt to equity ratio on the fund at three to one. It’s projected that investors in the fund will achieve at least a high teens leveraged IRR. This yield assumes a holding period varying from two to six years.
The investment strategy for the fund is to invest in value-added retail properties in the Northeast and Mid-Atlantic states. This could be grocery-anchored neighbourhood or community centers and strip and power centers.
Most of the deals for the fund will be in the range of around US$25m. This will include a combination of debt and equity. WP will look for properties that it can add value to through a re-tenanting, re-development or add a new facade.
WP Realty has already closed on two deals for the fund. One transaction was the purchase of the 320,000 s.f. East End Center in Wilkes-Barre, Pa. The acquisition price was US$10m. This property represents a major leasing opportunity. The center is 50% leased. The major anchor is Price Chopper, a grocery store chain.
The other property purchased was the acquisition of Hood Commons in Derry, New Hampshire. The purchase price was US$16m. The 210,000 s.f. property is anchored by a Shaw’s Supermarket. The center is 70% leased. The new owner hopes to increase the occupancy and add value to the center by building a new facade.
