By Jon Peterson
Interest in the multifamily sector continues to grow as rents nationally continue to climb and the product shows its sustained ability to outperform other parts of the commercial real estate industry. Irvine-based FPA Multifamily is looking to expand its footprint in this area, and the company has established a $1.35 billion targeted capital raise for its FPA Opportunity Fund VIII, according to a board meeting document for the New Mexico State Investment Council. The fund manager has an investment history of investing some of the capital for its commingled fund along the West Coast in the areas of Northern and Southern California, Seattle and Portland. This activity is part of a national investment strategy for the company.
FPA Multifamily did not respond to phone calls seeking comment for this story. The company operates its national acquisitions team from its San Francisco office.
New Mexico State Investment Council has become an investor in Fund VIII; the sovereign wealth fund has approved a $100 million commitment into the commingled fund, according to information provided by the investor. The fund offering is looking for investment opportunities that have the ability to produce a 12 percent net IRR yield.
The commingled fund in general will be looking for value-add apartment complexes that are considered to be B quality communities that are set in suburban locations. These assets would be situated in major markets that are characterized by job and population growth that are above the national averages.
FPA Multifamily made a presentation to New Mexico for its board meeting where it spelled out the three main investment strategies for Fund VIII. One of these was value-add acquisitions, which would focus on either the acquisition of an older property that needs to be renovated or repositioning of a new property that was constructed without modern and sought-after amenities.
Some capital will also be invested in recovering/emerging market opportunities. These would be assets in markets with strong long-term market fundamentals.
A portion of the commingled fund will be dedicated to special situation transactions. These could be investments with distressed ownership groups, underperforming property management, distressed debt situations, foreclosures and creative financial situations.