MIAMI-Locally based Alterra Capital Group has raised $23 million in private equity with plans to invest in $80 million in stable and distressed B and C class multifamily housing in Houston, Dallas and Atlanta over the next three to five months. The company is also working with locally based Cohen Financial to raise an additional $50 million in institutional equity to begin another fund early next year. The projected annual returns for the two funds are 30% to 50% over three years.

Alterra Capital Group principal Matt Papunen tells GlobeSt.com that the company seeks to invest in properties in secondary or tertiary markets, rather than primary markets. "These are the markets we're finding that we can create value in," he says. "We look for markets with relatively moderate rents and job growth."

The firm's $70-million portfolio consists of projects in Alabama, Georgia and Tennessee. It owns six projects valued at $2 to $10 million each, for a total of approximately 1,500 units. All of the properties were distressed at the time of acquisition and are currently income-producing. By the end of 2008, the company plans to grow the portfolio by 10,000 units.

"Excess liquidity has played a part enabling many new entrants to pursue multifamily investment leading to premium prices for assets with relatively low returns on a risk-adjusted basis," Papunen says.