Goin' Fishin' With $150M

May 25, 2010 | 8:00 am ET Staff Reporter

If Capt. Ahab were a modern-day opportunity fund, would he still get his whale? Perhaps, if he armed himself with $150M in equity(initial close: $40M) like the newly formed Valeo Fund is doing to take down underwater assets over the next few years.

Sharing the title of managing director with Steve Lipscomb, center, are Fred Hamm and Jim Yoder, as well as Mike Lewis (who must've been out rounding up money when we took this). The team brings a wealth of experience (get it?) to the new firm. Fred was an exec at the Keystone Group; Mike, a managing director at Crescent Real Estate Equities; Steve, the national director of Archon Retail; and Jim, a managing director of JLL's investor services group. Steve tells us the firm is in the initial stages of its money-raising campaign.

The guys started on their quest in mid-February (from offices in the Crescent, above) and are now 75% of the way to the first closing of $40M, Steve tells us. They won't put more than 60% of the initial acquisition cost in debt on any of their assets—no overleveraging or overpaying thank you. Investors like the fund because of its size and makeup, Jim says, with a focus on retail and office properties. The average target asset size? Between $20M and $40M.

Jim says funds raised this year will provide opportunities to buy late in 2010 through '12. Listings are trickling in, but a flood of problem assets this year would be felt in 2011, given that it takes most banks about 12-14 months to figure out what they're going to do. Fred says the fund will look for geographic diversity to lower risk factors and concentrate in markets where the partners have experience. He tells us the fund will focus on strong demographic growth areas, including Texas, Colorado, Georgia, Florida, the Carolinas, DC metro, and selective California coastal cities.

Goin' Fishin' With $150M

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