Multifamily Portfolio AcquisitionEast Coast

The Challenge:

  • A major U.S. insurance company wanted to liquidate a $300 million portfolio of garden-style apartments that had been developed over the preceding five years.
  • The portfolio was owned in a joint venture with a publicly-traded REIT; the REIT was not in a position at the time to buy out its insurance company partner, but hoped that it could influence the ultimate outcome of the sale to retain management of the portfolio.
  • While several of the largest real estate brokerage firms were interviewed to represent the seller, the insurance company selected an accounting firm to run the process.
  • The accounting firm approached Vincent Costantini, as the Chief Investment Officer of a billion-dollar family office, with the opportunity.

The Result:

  • While the due-diligence package was well organized, the sales process was so rigid in terms of time frame (80 days from start to finish), bidding structure, terms and required “hard” deposits that Vincent believed the buyer pool would be limited.
  • The strategy: (a) commit a substantial amount of both manpower and due-diligence dollars to the project; (b) propose to the REIT early in the process that it would remain manager of the portfolio for an extended period of time to increase the chances that the bid would be successful.
  • Won the deal on the basis of this approach, structuring a 24-month seller financing bridge from the insurance company, enabling permanent financing to be arranged after some additional stabilization and outside the required 80-day closing timeline.
  • The portfolio was ultimately sold as a package, earning a return of more than two and a half times invested equity capital.

At A Glance

$300 million

in capital invested
(debt +equity)

>2.5x

multiple on equity invested

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