DealPoint Merrill and SVNIC Join Forces

LOS ANGELES—DealPoint Merrill and Sperry Van Ness International Corp. have partnered together to form a private equity investment platform that will operate under the name SVN DealPoint Merrill Realty Partners, GlobeSt.com reports exclusively. The platform plans to purchase $100 million in properties in its first year, and will focus on deeply discounted, risk-adjusted multifamily, multi-tenant retail and self-storage properties.

“With our first priority being capital preservation, our investment strategy is focused on investments that can offer near term security through stabilized income. On a risk-adjusted and opportunistic basis, we prefer apartments, multi-tenant retail and self-storage properties,” David Frank, CEO of DealPoint Merrill, tells GlobeSt.com. For multi-tenant retail properties, the firm will focus on value-add opportunities, specifically for “grocery- or shadow-anchored multi-tenant shopping centers with vacancy, excess land, poor tenant mix or other value-added components on an opportunistic basis,” says Frank. Similarly, they will also look for value-add multifamily opportunities. “This strategy may include some new construction or refurbishing of older properties with vacancy in supply-constrained markets on an opportunistic basis that will provide strong incremental arbitrage returns from refurbishment and upgrades,” he explains. Finally, for self-storage properties, the firm will focus on adaptive reuse of big box properties. “Adaptive reuse of well-located corporate manufacturing, warehouses and vacant “big box” retail properties, which can be acquired at a deep discount to replacement cost; then redeveloped into climate controlled self-storage 'super centers' augmented by onsite business amenities and retail tenancy,” he.

The partnership will look for these opportunities in major metropolitan markets throughout the country; however, Frank said that they will not limit themselves when looking for opportunities. When explaining their investment objectives, Kevin Maggiacomo, president and CEO of SVNIC, tells GlobeSt.com that they will “quickly maximize values; generate superior cash-on-cash returns; provide for prompt return of capital through refinance or sale; create relatively short holding periods of three to five years; and provide for minimal development risk and quick market entry.”

The partnership plans to raise the $100 million through institutions and family offices. “From there, we'll leverage the SVN distribution channel for value added property investments then sell through the SVN Advisory platform once we stabilize operating performance and when market conditions make sense. The latter piece is a big key to maximizing investor returns. The SVN brokerage model calls for our proactively cooperating with and marketing all of our listings through the entire brokerage community, offering 50% of the total commission 100% of the time in the process,” says Maggiacomo. “This model provides for a weapon of mass collaboration, generates organized competition for assets, maximizes value and will prove highly beneficial to this new private equity platform.”