For Paragon Real Estate Fund's Roberto Jinich, unicorns do exist. He just wants to find more of them.

San Diego-based Paragon just purchased the Unicorn Building, the two-story, 13k SF retail building at 7th and J streets connected to the Sempra Energy HQ development. Paragon purchased the building—currently empty with ground-floor restaurant space and second-floor office—from Cisterra Development for an undisclosed sum. Roberto says the building has a historic pedigree, and is adjacent to the new HQ, so leasing it up should be easy. Especially since Roberto subscribes to the Millennial story—they're moving back into downtown environs and want a live/work/play atmosphere.

This is the latest buy for Paragon's $160M levered investment fund targeting smaller urban retail and mixed-use properties typically overlooked by the big institutional investors and too expensive for mom-and-pop investors. And it's not just San Diego its shopping: other markets include Phoenix, San Francisco, Houston and Atlanta. All these markets have common denominators, Roberto says: population and tech job growth in the backdrop of having a critical mass of either Fortune 500 or tech companies. “We tried to capitalize on the retail portion of the Downtown corridor,” he says. “We don't have that much competition from [big investors].” Unicorn is an unusual buy for Paragon. Overall, Roberto says the fund prefers stabilized assets because it has a long-term hold horizon.

Believe it or not, this is actually a strategy change for Paragon since its 1998 inception. Back then, it was more hungry for multifamily. Today, Roberto says the fund is culling its apartment holdings, and is in fact under contract to sell its very last multifamily holding—a Tuscon apartment complex. “I think prices are being paid that are very high for multifamily because there is inexpensive financing available,” he says. Roberto says Paragon is still very conservative on its buys—never securing a property at more than 50% LTV. And he left us with one tidbit: Paragon is under contract with an undisclosed commercial property in Downtown San Diego near Petco Park that should close in January.