A-Rod Led R.E. Investment Firm Launches Fourth Housing Fund

MIAMI—A real estate investment firm founded and led in part by former Major League Baseball great Alex Rodriguez has closed its first workforce housing fund and has launched its fourth fund with a target of raising $50 million in capital.

Miami-based Monument Capital Management, an A-Rod Corp. company, reports it closed its first multifamily fund—Fund I—with the sale of its Hampton Forrest Apartments complex in Greenville, SC for $8.9 million. With more than $20 million raised from high net-worth investors, Fund I eventually consisted of a total of more than 2,700 workforce housing units in six states, primarily located in Texas, Maryland and the Southeast US.

Properties acquired and disposed in Fund I include: Forrest Village in Suitland, MD; Country Club in Charlotte, NC; Millbrook Pointe in Augusta, GA; Casa de Luna in Raleigh, NC and La Esencia in Houston, TX, among others.

Fund I realized a net initial rate of return of 30% to its investors after divesting a total of 10 assets valued at $123 million. In addition to $10 million raised by Monument Capital, Fund I also involved a joint venture with another similar housing fund, that brought the total investment to approximately $20 million.

Monument Capital Management was founded by baseball great Alex Rodriguez, who also founded A-Rod Corp., and founding principal Ramon Corona in 2012. MCM has since acquired $700 million of real estate assets across 13 states through opportunity funds and joint ventures and specializes in engaging in capital upgrades and value-adds after purchase that improve the assets prior to disposition.

The firm’s newly launched Fund IV, is a value-add workforce housing fund that will focus on expanding Monument’s presence within Sunbelt markets, as well as select areas of the US Midwest, where it already has a presence.

“We anticipate continued strong demand for workforce housing within key markets,” says Stuart Zook, principal of Monument Capital Management. “This sector of the housing market is appealing to a broad range of individuals, from millennials to seniors, with many areas still undersupplied.”

Zook tells Globest.com that Fund IV is under contract and expects to close on its first initial purchase of a 167-unit townhome community in a southwest suburb of Chicago by the end of May 2019. The deal will involve Monument Capital’s third investment in the Chicago-area real estate market.

He says that Monument is hoping that Fund IV with its targeted $50 million raise, can eventually yield $200 million in value.

In terms of Fund IV’s market focus, Zook says that Monument “has invested a lot in the Carolinas and we will continue to, both in North and South Carolina. Also, we are always looking at Florida but it is a little more difficult.”

When asked if Monument Capital has any other transactions for its Fund IV in the pipeline, Zook responded, “We are looking at some deals up in Minneapolis believe it or not and also in Houston.” However, he said no deals are close to being finalized.

Zook says that Monument Capital’s strategy has been to purchase attractive workforce housing projects and bring a value-add to the asset.

“Everybody uses that term ‘value add,’ but what we try to do is do a little more than that,” he explains. “We try to add value by rehabbing the interiors of the units, but we also try to provide additional amenities. Workforce housing a lot of times has a family component to it. We like to expand the amenities section, such as double the size of the playground; we like to make sure we have space that families can use because in their apartments it is difficult to have family events.”

He added that sometimes the Monument-fund owned communities will add services, for example, such as partnering with the local library to have book readings scheduled for residents’ children.

“We like to do a little more than spend $5,000 to $7,000 a unit on rehab and raise the rents,” he remarks.

Zook notes that Fund IV will be a little different than its previous funds in one significant way—Monument plans to hold on to its assets for a longer period before disposition.

“Our holding period in the past has been say four to six years…” he says. “Actually, in this fund we are looking to hold seven to 10 years.”

He says that with the investors focused on yields, Monument Capital has decided to extend its hold period and maintain its yields for a longer period of time.

Monument Capital’s second fund—the Monument Opportunity Fund was launched in 2014. MOF purchased 15 properties in 15 months, totaling $151 million and 3,000 units. MOF utilized a similar investment strategy it deployed with its first fund and identified and acquired workforce housing in key locations including North Carolina, South Carolina, Maryland, Ohio, Virginia, Texas, and Georgia. For this fund, Monument Capital Management expanded its target areas from the Mid-Atlantic and Southeast to also include the Midwest and Southwest regions of the U.S. to further diversify its portfolio and capitalize on opportunities in the multifamily market.

At present, the fund has disposed of seven assets and has eight still left on the books. Zook tells Globest.com that Monument Capital expects to close this fund sometime during the next two years.

Monument Capital Management launched Monument Opportunity Fund III in September 2015 and acquired 11 properties, totaling 2,400 housing units, with $129 million in total assets. The fund opened new markets in Kentucky and Arizona and also revisited successful markets in South Carolin,a which experienced significant job creation.

Properties in Fund III are located in South Carolina, Georgia, Arizona, Kentucky and Texas. Six assets are currently left in that fund. The fund closing is expected sometime over the next three years.