Los Altos, Calif., (March 17, 2022) – Institutional fund manager and value-add investor Interstate Equities Corporation (IEC) has announced the final close of its fifth institutional fund, “IEC Institutional Fund V,” with $445 million in equity commitments.
The fund, which will invest in acquiring, renovating, and repositioning value-add multifamily properties across California and Washington, follows the firm’s closing of its “IEC Institutional Fund IV” in 2018 that garnered $300 million in equity commitments.
“Due to our strong partnership with our investors, whom we think of as friends, we were able to close Fund V oversubscribed after seeking a waiver to surpass the initial hard cap of $400 million just 7 months after the funds’ initial launch and without using a banker in the process. Efficient fundraising allows us to focus on investing and managing carefully,” says Marshall Boyd, Co-President and Chief Investment Officer of IEC.
Boyd explains that IEC had a 98 percent reinvestment rate from “IEC Institutional Fund IV” institutional investors and a few special new investors which each add something unique in terms of causes they serve and deep investment experience.
“The ability to raise this capital and surpass the initial hard cap, amid the pandemic, speaks to the strength of our strategy, the breadth of our team, our tenure in the industry, and the integrity with which we approach every situation,” notes Julia Boyd Corso, Co-President and Chief Operating Officer of IEC. “Our investors recognize the strength of our business platform and our unique ability to identify assets that need repositioning and create value through renovations and optimizing operational inefficiencies. We are honored to work with this group of investors and look forwarding to doing so for a long time.”
IEC invests in value-add multifamily communities in California and Washington with an emphasis on workforce communities and takes a vertically integrated approach across its portfolio, which includes 19 cities. The company targets dated multifamily apartment properties and transforms them into modernized, boutique-style assets at attractive price points.
“We take a multipronged approach to our investment strategy that allows us to capture both ends of the value-add multifamily market,” says Boyd. “We specialize in renovating and repositioning value-add assets in durable infill markets throughout California and Washington – specifically the Bay Area, Orange County, Greater Los Angeles, San Diego, and Seattle – where there is a tremendous opportunity for value creation and a lack of housing. We also target larger-scale institutional-quality assets that require a more strategic approach to renovation.”
IEC acquired more than $700 million of apartment assets in the past 12 months. Most recently, this included a 146-unit community in Mission Valley, California, from families who owned the asset for decades, and The Bryant, a 400-unit community in Yorba Linda, California. Both properties reflect strong value-add opportunities in markets with robust fundamentals and are representative of IEC’s strategy of acquiring assets that are positioned for long-term growth.
“We aim to continue to expand our portfolio by actively acquiring well-located, un-optimized multifamily assets that are poised for a turnaround,” says Boyd Corso. “Above all, we prioritize and are deeply invested in creating value for our investors and providing high-quality, budget-friendly communities for residents.”
Goodwin Proctor LLP provided legal advice related to the fundraise.
Founded in 1981, Interstate Equities Corporation (IEC) is an institutional fund manager that invests in and transforms California apartment communities on behalf of endowments, foundations, family offices and pension funds. With 40 years of industry expertise, IEC has navigated multiple investment cycles, investing in more than 120 apartment communities over the past 40 years with this investment thesis. Utilizing repositioning strategies via its integrated property management platform, IEC secures and generates value for its long-term partners. The firm credits strong relationships and an academic, data-driven approach to investment and property management as the core of the consistent results it delivers to investors.