MEMPHIS-In a joint venture with institutional capital, locally based REIT Mid-America Apartment Communities Inc. has established a fund aimed at acquiring $500 million in apartment properties over the next three years. The fund, called the Mid-America Multifamily Fund I, LLC, will target investments within the company's existing Sunbelt markets and operating region. Mid-America expects to invest a total of approximately $60 million in equity as investments are made.

Mid-America will own a one-third interest in the fund, which will have a six- to nine-year investment life. The fund will focus on acquiring properties with redevelopment potential that offer value-creation opportunity through capital improvements, operating enhancements and restructuring in-place financing.

Mid-America Communities CFO Simon Wadsworth tells GlobeSt.com that no apartment properties have been acquired yet under the fund, but the company is currently considering a few properties. "We aren't targeting properties of any particular size or value, but we're generally considering opportunities for value-add investments," he says. "Typically they will be seven years old or older, where we can bring added value through improved management or capital."

Mid-America will earn a management fee, an asset management fee and have the potential to earn promote fees. Mid-America will continue to acquire newer properties for its own portfolio. There are no plans for Mid-America to contribute its existing properties to the fund. The company currently owns or has interest in 39,587 apartment units in 14 states.

"We think this new initiative provides an excellent opportunity to create value for both Mid-America's shareholders and institutional partners by leveraging our robust deal flow pipeline, significant experience in redeveloping apartment real estate and sophisticated operating platform." says Mid-Apartment Communities CEO Eric Bolton.