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Miami-Based Firms Raise Over $500M For 2 Multifamily Investment Funds

Two Miami-based firms are planning more than $500M in combined investment in U.S. residential properties. 

Eagle Property Capital Investments announced it had closed a $309M fund aimed at acquiring value-add multifamily properties across the Sun Belt, while BEO Investments announced a $200M capital allocation to invest in condo development across the country. 

The Pelican Lake apartments outside Tampa are among the 10 assets already acquired by Eagle Property Capital Investment's fifth fund.

The capital from the Eagle Property fund, EPC Promecap Multifamily Partners V LLC, will enable around $833M in total investment, according to a release. The fund will primarily target assets in Texas and Florida but will look at other Sun Belt markets, said Gerardo Mahuad, co-founder of Eagle Property. 

The fund was launched in 2021 and is focused on properties that can be acquired at a discount to replacement cost and benefit from repositioning in cities with a large Latino population. It has an estimated hold time of five to seven years and is targeting a 12% to 15% internal rate of return. 

The fund is a partnership with Promecap, a private equity firm based in Mexico City, and has already acquired 10 multifamily properties. Nearly all of the capital raised for the fund came from international investors, with a majority of the money coming from Mexican backers, Mahuad said. 

Multifamily assets offer a “more defensive and less volatile” investment in the current market, in part because macroeconomic trends are signaling that housing will remain resilient, Mahuad said, despite the delivery of 128,100 new units across the U.S. in the first nine months of the year. 

“The hoped-for economic ‘soft landing’ appears to have largely been achieved thus far,” he wrote in an email. “As a result, the expectation from a demand perspective is that the economy will continue to generate enough momentum to provide some tailwinds for household formation.”

While Eagle Property and Promecap are targeting existing properties, asset management firm BEO Investments is planning to invest $200M providing developers up to 50% of their capital requirements for new condo projects. 

BEO is deploying the capital after an investor approached it with a specific requirement for condo investment, said Jordan Alvarado, BEO’s chief strategy officer. The terms differ from traditional equity investments and include a combination of buyback purchase arrangements and the issuance of bonds. 

The investment firm is looking for opportunities in the top 30 U.S. markets, with a focus on Class-A properties that demonstrate strong fundamentals.

“While we are based in Miami, our scope extends beyond South Florida, encompassing a national perspective within these top markets,” Alvarado wrote in an email. 

Multifamily investment activity has slowed dramatically from pandemic-era highs amid high interest rates, a slowdown in rent growth and a lack of activity, which have combined to hinder price discovery. 

The $30.1B in third-quarter sales volume across the U.S. was down 61.7% year-over-year, according to Newmark, and limited access to capital had helped push new construction starts down by 58.6% over the last 12 months at the end of the third quarter, according to Avison Young

Uncertainty in the market has led lenders to hold on to capital for both acquisitions and new construction as they wait for the Federal Reserve to drop interest rates, speakers at Bisnow’s South Florida commercial real estate finance event said last week.

With so much U.S.-based equity on the sidelines, Latin American investors looking for U.S. opportunities to hedge against political and economic turbulence at home have become a key source of funding for real estate investment firms, especially in South Florida, speakers at the event said.

“Argentina and Colombia, in those two markets, there’s definitely private equity and capital coming from there,” Tomas Sulichin, president of the commercial real estate division at Related ISG Realty, said at the event. “It’s not a huge ticket — families usually invest anywhere from $800K to $2M — so it takes a lot of work to add everything up in order to really do a project successfully.”