CAPFUNDR and Hamilton Real Estate Capital have rolled out the CAPFUNDR Hamilton Multifamily Fund, a $50m offering that will acquire apartment buildings in historically stable Midwestern markets. The fund will buy properties in markets that include Columbus, Cincinnati, and Indianapolis, which have not seen the same influx of capital as gateway cities.
The fund is part of a broader move by CAPFUNDR to create a family of funds in which it joins forces with a best-in-class operator to target a particular sector or market. Hamilton, which saw strong returns for its first three funds, fit the bill perfectly, said Jean-Michel Wasterlain, ceo of CAPFUNDR. “Our role is capital raising, investor reporting, and investor management,” he said.
CAPFUNDR, which was introduced to Hamilton via mutual connections, liked the firm’s Midwestern apartment niche. “We have an oversight role in the fund and want to make sure our investors have a representative who is looking out for them and making sure that the deals that the fund is doing are consistent with their strategy,” Wasterlain said. “We have a seat on the fund’s investment committee and get to see and approve every deal that is done.”
"WE’RE NOT GOING TO FIND HIGH-END, LUXURY MARKETS BUT YOU WILL SEE GOOD, SOLID APARTMENT PROJECTS THAT WE'LL BE ABLE TO ACQUIRE AT BETTER CAP RATES"
-- JEAN-MICHEL WASTERLAIN, CEO OF CAPFUNDR
Hamilton is affiliated with a leasing and management company in Columbus, with an option to buy a majority stake. “That affiliation gives them a local presence and helps them to be plugged into deal flow,” Wasterlain said. “It’s really important to have that kind of detailed local knowledge if you’re going to play in these markets.” Its sweet spot for deals is $5-10m, with cap rates in the 7-9% range, and Hamilton has the option of bringing in outside investors for larger deals.
The fund’s thesis is that home ownership will continue to be much lower than it was prior to the 2008 crash. “I think demographics will continue to point to high demand for apartments,” Wasterlain said. “What has happened so far is that there has been a lot of capital flowing to apartments in major gateway markets. The Midwestern markets have been neglected in that way. We’re not going to find high-end, luxury markets but you will see good, solid apartment projects that we’ll be able to acquire at better cap rates.”
CAPFUNDR, an online marketplace that provides institutional-style real estate investment funds, will work to raise capital from individual accredited investors, family offices, and small institutions. The fund has a minimum investment of $10,000. Investors of more than $250,000 will see a 25-50 bps reduction in management fees, Wasterlain noted.
Originally Published on Real Estate Finance & Investment (REFI) on August 15th, 2016.