Advanced Real Estate Services has launched its first mutual fund. The fund has raised $ 250 million to $ 300 million in equity and more than $ 500 million in purchasing power. In addition to raising capital through its existing pool of investors, Advanced completed a cashout refinancing for six properties totaling $ 240.4 million, generating $ 100 million for inclusion in the fund. NorthMarq arranged financing on behalf of the borrower.
"We wanted to switch more to a fund structure and we took the time during the pandemic to outline that." Paul Julian, Client at Extended real estate servicestells GlobeSt.com. “With this $ 100 million refinancing, we have the seed capital to start the first fund. All of our investors are private capital. It's a large network of friends and family that has grown to around 500 investors over the years. When we had the opportunity to convert the proceeds from this refinancing into a new fund, it was received with great enthusiasm. "
The refinancing comprised the Corona Pointe Resort with 714 residential units, Corona Pointe Townhomes with 63 residential units, The 5800 Apartment Home with 149 residential units, Pacific Palms Apartment Homes with 149 residential units, Avignon Apartment Homes with 88 residential units and Washington Place with 60 residential units. The portfolio was funded through Freddie Mac and Fannie Mae. All properties except the Corona Pointe Resort had an outstanding term with no prepayment fees. “We're very happy because Advance was really good at dividing their business between Fannie and Freddie. On that basis, Freddie performed so well under the circumstances. " Michael Elmore, EVP and Managing Director NorthMarq, tells GlobeSt.com. “The only change in business due to COVID was that they had to put cash flow escrow accounts, but that's a common practice right now. The fact that Freddie held all of the economic terms and advanced advanced on the economic side during the worst of the recession is really why this deal was able to be carried out. "
Advanced has raised $ 100 million from the fund's refinancing and has raised additional funds through its investor network who remain committed to Advanced Southern California's real estate strategy. "With our network, we will likely have about $ 150 million to $ 200 million in equity," says Julian. Coupled with a recently completed foreign exchange fund of around $ 100 million, we will have $ 250 million to $ 300 million in funds to buy assets. We currently have an escrow account of $ 250 million and are looking for additional properties in the range of $ 450 million to $ 500 million. "
Advanced has not changed its strategy despite the pandemic and market change. However, it was not easy to find offers for this market. “We only buy in Southern California, so that's a challenge but we can achieve it,” says Julian. “The broker community is taking note of our equity and is dissuading us from doing market deals. All three properties that we currently have in escrow are off-market deals. "