Magellan Plans Acquisitions Nationwide
This week Magellan Development Group and its new partners launched Magellan Investment Partners, its investment arm that’s charged with acquiring multifamily across the country. (It's a good excuse for a cross-country road trip.)
Pioneering the new venture: CDO David Carlins (prez of Magellan Development), COO Marc Swerdlow, and CIO David Levin. In addition to 75 years of combined real estate experience, the trio of marathoners and triathletes has about 75,000 miles under its belt, David L. and Marc tells us. So they know a thing or two about timing. Marc left Waterton six months ago just as David started selling off his portfolio and winding down Levin Realty Advisors. With Magellan Development branching out of Chicago via projects in Minneapolis, below, and Nashville, it made sense to build the development brand’s (two words: Lakeshore East) investment capabilities, they say.
MIP will target core-plus, value-add opportunities in markets where Magellan is building or looking to build (Austin and Miami are up next), focusing on properties built from the late ‘90s to ’07 where it can renovate and raise rents, David says. It will also consider other markets with high potential rent growth, job growth, and limited supply. For financing they’ll typically put leverage between 60% to 70% on new acquisitions, and will consider the GSEs, banks, and life companies. In Chicago, David and Marc are bullish on the city’s tech boom and positive population growth, as today’s more mobile renters migrate to the highly amenitized urban core.
With MIP, Magellan can meet the needs of both long-term, limited risk investors and three- to five-year value-add players, they say. Core high-rise luxury development (Coast in Lakeshore East, above) is the best long-term play, while shorter-term investors (especially international investors looking to deploy capital fast) are clamoring for value-add deals where there’s significant runway left in terms of rent growth. Since MIP can get into markets faster, it can also gather information and talent vital to future Magellan development projects, Marc and David tell us. And with every 1% decline in for-sale sending one million renters into the fold, the market isn’t slowing anytime soon for either venture.