Another day, another distressed fund is formed.
American Ventures Partners announced that it launched the American Ventures Strategic Property Fund to invest in distressed US commercial real estate. The fund, which will provide a tax-advantaged structure to non-US investors, has a target capital raise of $1 billion. It will focus on properties valued at more than $50 million and priced below replacement cost.
The Strategic Property Fund is targeting returns of 15% to 18%, net of fees. It will be backed by conservatively leveraged, well-located Class A properties and supply-chain facilities. The portfolio will maintain low and moderate leverage while controlling tenant size and industry exposure.
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"Uncertain times offer extraordinary opportunity," Philip Blumberg, chairman of American Ventures said in a prepared statement. "That holds true like never before, with Class A office properties available at steep discounts. Geographically, our best opportunities will be found in states with comparatively low costs of living and taxes, such as Texas and Florida, markets where we have strong experience."
The Strategic Property Fund is the fifth distressed commercial real estate fund formed by Blumberg over three decades. American Ventures average annual returns of 18%, net of fees and expenses, since 1992. Before the worst part of the Great Recession, Blumberg sold his national real estate portfolio of Class A office properties in the country's Sunbelt.
American Ventures joins several other companies raising distressed funds. Earlier this week, Greenberg Gibbons announced that it is in the final stages of raising a $100 million private equity fund to make strategic shopping center acquisitions in East Coast, Southeast and selected Midwest markets. The fund, which will have the capacity to acquire $300 million of assets, will reposition retail spaces, make property upgrades, develop additional uses and improve operations.
Also, Electra America teamed up with AKA to form the Electra America Hospitality Group to acquire distressed assets in urban gateway markets. The fund is in the process of raising $500 million in capital from investors for the acquisition of independent hotels in major gateway markets.
"Our business plan assumes that a large number of the hotels that we buy will be closed. Our plan is to take advantage of downtime in the operating cycle to renovate," Russ Urban will serve as CEO of the new venture, told GlobeSt.com.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
