ArcWest Plans to Buy $400 million in Western US
The investor receives a second allocation from Belay Investment Group of $100 million to acquire real estate assets in Western US urban markets.
“We specialize in creating urban mixed-use environments in primarily California and Texas to target millennial growth,” Quincy Allen, co-founder and managing partner of ArcWest Partners, tells GlobeSt.com. “There are more than 95 million millennials coming of age and they are the largest and most diverse age group in U.S history. Their strong preference is for urban mixed-use that offers amenities, good food, diversity, walkability, close access to job centers and transit. We pursue this demand with curated value-add repositioning that impact infill locations.”
The firm will execute a value-add strategy, which has become a highly competitive space, particularly in California. However, Allen says that the capital resources will help to curb competition and win deals. “The scale of the capital and the collaborative relationship with Belay Investment Group is a tremendous advantage,” he says. “The programmatic joint venture model allows us to efficiently target middle-market, $10 million to $70 million, deals that are more relationship-driven. We target opportunities that are off-market, a broken/limited process or with non-institutional ownership that have not been fully repositioned. So, our vertically integrated team increases value with our hands-on approach and institutional ownership.” The Chapman Market in Koreatown is an example of the firm’s strategy. ArcWest acquired the 45,000-square-foot retail center from a private owner and performed a complete renovation, including upgrading the tenant mix with more food and restaurant options. The firm also activated the courtyard space at the property.
The California State Teachers’ Retirement System capitalizes Belay, making it a strong partner for this strategy. “Belay is a value-added capital partner that invests through collaborative investment programs designed to identify and support the growth of high caliber operating partners,” explains Allen. “Belay is an advisor on the overarching strategy while Arc’s focus is on the investments, day-to-day operations and execution of the business plans. Overall, the programmatic joint venture model allows large investors to invest with scale in the middle-market space and gain access to a diverse set of operators such as Arc with deep institutional experience and a proven track record.”
The firm plans to hold the assets it acquires for four to five years, creating value in the first two to three years. “We can hold deals longer if the business plan dictates,” says Allen. “Also, we target mixed-use environments and locations that are durable and are ones that are defendable to own through the downturn or long-term, if needed.”