MJW Investments has launched a $500 million fund to focus on value-add multifamily investment opportunities that will likely arise out of the economic crisis. The firm launched the fund with a $300 million fundraising goal, but increased the threshold to $500 million after seeing strong interest.
“Even before the virus, we felt that there were some imbalances in the market,” Mark Weinstein, founder and president at MJW Investments, tells GlobeSt.com. “Prices had gotten high, and we felt student housing was being mispriced because there is more risk in it. We thought that there might be some corrections coming, and we wanted to launch a fund to take advantage of the changes that could come in the next year or two—but we didn’t expect anything like this. When this happened, we already had everything ready to go, and we modified it to address opportunities due to the virus.”
The fund will focus on value-add multifamily, distressed assets and student housing. “We found that many people want to get out of the management business anymore, so we are looking for undervalued real estate both locally and nationally to hold for the long term,” says Weinstein. The majority of the fund’s investors are high-net worth individuals, family offices and private wealth management firms.
For now, MJW is sticking close to home, largely because social distancing measures prevent them from traveling to assess properties and neighborhoods. “We are more focused on regular apartment buildings throughout Southern California,” says Weinstein. “We are looking at markets where we have broker relationships, but it is really difficult when you can’t see the property. When travel is allowed again, we will start going to other markets, but for now we are staying where we are. We are already talking to people about specific deals, and we have lending relationships, lines of credit and our own credit that we can use to buy assets right now.”
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While it seems like an odd time to launch a fund, for Weinstein, the timing is perfect. His investors think so too. “I have been through a few of these recessions, and I have seen what goes on. We have had a really good track record in our returns,” he says. “When the economy is dislocated, there is opportunity. We have been telling investors to hold on for the last two years, waiting for something, and now I have had people reaching out asking what I am going to do. So, when we launched with this, there was a pent-up demand. These are people that have been investing a lot with us for years. We aren’t going to spend the money tomorrow, and we are very cautious.”