Northstar Commercial-Integrity Trust Launch $125M Fund

DENVER—A partnership of Colorado-based firms have launched a new $125-million fund that will be focused on value-add investments in growth markets in the western part of the United States.

Northstar Commercial Partners of Denver, in partnership with Integrity Trust of Colorado Springs, CO, report they have launched the Northstar Integrity Growth Fund. The fund, structured as a REIT under a 506(c) designation, is an evergreen fund focusing on 75% value-add, and 25% cash-flowing commercial real estate investments in primarily Western growth markets, including but not limited to Colorado, Utah, Texas, Arizona, New Mexico and California.

Northstar founder and CEO Brian Watson said, “Launching a structured fund was the natural evolution for Northstar and Integrity, together we have successfully executed on 38 transactions, with a value in excess of $130 million over the last several years, generating a median annualized return in excess of 21%. In combining our resources and industry knowledge, I’m excited about the prospect of how the Northstar Integrity Growth Fund can create more opportunities.”

The launch of the fund will target commercial real estate assets with at least a 30% discount to replacement cost and hopes to reasonably project an investor level IRR of 14%-18%. The two firms in a joint announcement state that due to growing market uncertainties in the coming months, “Northstar and Integrity Trust hope the Fund will help mitigate risks by providing investors with access to a diversified real estate asset portfolio which will have a low correlation to the public markets.”

“We like the idea of launching the Fund at this time, because the strategy of buying hard assets at a deep discount to replacement cost has proven itself through several distinct market environments,” said Integrity Trust president Eric Davis. “We believe real estate investing can be a safe haven during slower economies.”

Integrity Trust offers wealth management, financial advising, and alternative investment opportunities for more than 2,000 clients across the nation.

Last week, Northstar Commercial Partners, Milender White and Canyon Partners Real Estate LLC announced the successful closing of a new, mixed-use development Parkside @ City Centre. Located east of Denver in Aurora, CO Parkside is a ground-up, mixed-use development featuring 216 market-rate, multifamily apartments, and 36,000 square feet of retail on 5.6 acres. The development cost is expected to be $78.7 million, with $24.5 million of equity and preferred equity invested.

Located within an Aurora Urban Renewal District, the land for Parkside was purchased by Northstar in 2015. After several years of securing development approvals and forming the right partnerships, the development is set to break ground in April 2019. Northstar and Milender White will jointly serve as developer, and Milender White will also act as general contractor for the project.

Northstar Commercial Partners specializes in buying vacant, distressed, value-add, and income generating commercial real estate assets throughout the United States. Since its founding in 2000, Northstar has closed more than 139 deals, and currently has 47 retail, office, industrial/warehouse, medical, senior care, data centers, and day care facilities in 15 states under its investment, development, and management. The portfolio exceeds more than $1.35 billion of market value.