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Pennsylvania-based 5 Cap Realty LLC (5 Cap) and its affiliate RREIC Advisors has teamed with a private equity fund vehicle managed by JMP Asset Management LLC, an affiliate of publicly traded JMP Group LLC, to launch a multi-year national investment venture that could top $1 billion in assets under management. The venture will focus on acquiring and operating value-add multifamily assets that can be renovated, leased, and managed to create superior risk-adjusted returns.
This new partnership has closed on its first two acquisitions: an apartment community in the Philadelphia metro area and another in greater Atlanta, with a total of 446 units, for a total cost of just under $60 million.
“This is a great opportunity at a pivotal time,” said David Reiner, RREIC Advisors’ Managing Director. “There are a lot of undermanaged assets in the marketplace. Our team has demonstrated throughout its history that we can identify these assets and reposition them with better management, marketing, and capital improvements. Our plan is to build a billion-dollar multifamily investment platform. Over the next five years, we are targeting the acquisition of ten properties per year, each with 200-300 units, focusing on the nation’s top 50-60 markets.”
The Philadelphia area acquisition, Summer Chase, is located about 28 miles from Center City in Limerick, PA. The property has 198 large multifamily apartments, all with direct-access one- or two-car garages. The property was acquired for $36.3 million ($183,333 per unit) from an institutional seller. The new ownership plans to invest $2.5 million in renovations including kitchens, bathroom fixtures, and HVAC systems. Freddie Mac provided the debt financing.
The Georgia acquisition, Grove Mountain Park, is situated about 18 miles from downtown Atlanta, and was acquired for $21.6 million ($81,000 per unit). Its 13 garden-style buildings offer a diverse unit mix of studio and one- to three-bedroom apartments. The venture plans to invest $3.15 million in renovations to common areas and individual residences. Debt financing was provided by Fannie Mae.
5 Cap affiliate Forty Two LLC (Forty2), a multifamily property management, development, and consulting firm, will manage all of the JV’s acquisitions. Forty2 managed Grove Mountain Park prior to the acquisition and is taking over management of Summer Chase.
Since its founding in 2013, Forty2 has grown to have more than 4,500 multifamily units under management, with 1,000 new units in the pipeline. The firm’s founder and CEO, Jennifer A. Nevitt, is a well-known industry leader, author, and visionary.
“For decades, we have been the go-to team for banks, insurance companies, and institutions for workout plans and asset turnaround,” said Nevitt. “During the 2008-2012 capital markets debacle, we helped create financially viable solutions for some $6 billion worth of multifamily real estate, performing at the very highest level of difficulty. This experience means that we offer an unmatched level of expert talent that will be deployed to successfully reposition the venture’s expanding portfolio.”
About 5 Cap Realty LLC
5 Cap, based in Plymouth Meeting, PA, is seeking multifamily investment properties with value-add potential throughout the United States. 5 Cap’s multifamily investment initiative is a partnership with a private equity fund vehicle managed by JMP Asset Management LLC, an affiliate of publicly traded JMP Group LLC. 5 Cap is also an affiliate of RREIC Advisors, a registered investment advisor. On behalf of institutional and other investors, RREIC Advisors has managed an aggregate portfolio of $1 billion in gross asset value since inception, primarily in multifamily, mixed-use, office, retail, hotel and senior living projects.
About JMP Group
JMP Group LLC is a diversified capital markets firm that provides investment banking, equity research, and sales and trading services to corporate and institutional clients as well as alternative asset management products and services to institutional and high-net-worth investors. JMP Group conducts its investment banking and research, sales and trading activities through JMP Securities; its hedge fund, venture and private capital, and credit management activities though Harvest Capital Strategies, JMP Asset Management and JMP Credit Advisors; and the management of Harvest Capital Credit Corporation (NASDAQ: HCAP), a business development company, through HCAP Advisors. For more information, visit www.jmpg.com.
Forty-Two, LLC, a multifamily property management, development, and consulting firm, is built on a heightened commitment to strong net operating income growth with a focus on critical metric analyses that significantly increase total asset revenue performance. Forty2 branding drives the highest market price point through excellence in customer service. The focus of Forty2 is to acquire and train the best talent possible to serve multifamily owners and residents in a highly responsive manner with skillful attention to apartment management detail. For more information, visit, www.Forty2LLC.com.