BETHESDA, MD-Walker & Dunlop is in the process of raising capital for a second multifamily fund, which is tentatively planned to go to market at the beginning of next year, according to James Gurley, SVP and head of Walker & Dunlop's principal investments business. The new fund, to be called Walker & Dunlop Apartment Fund II, will likely have raised between $50 million to $100 million in equity. When leveraged, it should deliver about $250 million in purchasing power, he tells GlobeSt.com. Its investment goals will be to target value added multifamily opportunities in select markets in the Mid-Atlantic and southeast.
In that way it is similar to the firm's Apartment Fund I, Gurley says. Beyond that fundamental criteria, however, "this fund will be very complementary to our Apartment Fund I," with little investment overlap. Walker & Dunlop Apartment Fund I, which has about $250 million in assets under management, is an open-ended fund with significant equity left to invest, Gurley continues. Its most recent transaction was a $20-million acquisition of a Virginia apartment portfolio consisting of three apartment communities--Newport Trace, Warwick Landing, and Chowan Trace--located in Newport News and Portsmouth. The class B, 370-unit portfolio was acquired in a joint venture with Bonaventure Realty Group. The duo will invest in renovations totaling approximately $16,000 per unit and then rebrand and reposition the properties.
In addition to the equity kicked in by the joint venture, the acquisition was also financed by a five-year, fixed-rate, interest only loan provided by a major life insurance company. The joint venture can draw loan proceeds over a 24-month period as needed for upgrades. Gurley says he is hopeful the two firms will join up to invest in additional properties going forward.
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