Eyeing Market Opportunities, M-F Developer Expands into Acquisitions

After multiple quarters of dismal investment activity, new funds and investment entities are cropping up to capitalize on the discounted commercial real estate assets that are hitting the market. Atlanta-based Wood Partners L.L.C. has just entered the game, too. The multi-family developer has expanded its business platform to include acquisitions.

By: Barbra Murray, Contributing Editor

After multiple quarters of dismal investment activity, new funds and investment entities are cropping up to capitalize on the discounted commercial real estate assets that are hitting the market. Atlanta-based Wood Partners L.L.C. has just entered the game, too. The multi-family developer has expanded its business platform to include acquisitions.

“The investment acquisition strategy is to acquire properties in select submarkets in core cities nationwide, which in our opinion will generate long-term revenue growth,” Jay Jacobson, a Wood Partners director spearheading the firm’s new acquisition platform, told CPE via email. “This could include urban core product as well as primary suburban product. The strategy does not distinguish between low- or mid-rise, medium density or high-density product.”

The company will rely on multiple sources to finance the acquisitions, including individual investor partner funds and internal investment funds. “Wood Partners also is actively pursuing ventures with banks and other financial institutions in which Wood Partners would be an operating partner,” added Joe Keough, CFO of Wood Partners. “We are prepared to invest as much, or as little, as we feel is appropriate in each market at any given point in time.” The amount that will be invested for each individual property will depend on the capital source, but will likely range between $20 million and $50 million each.

Timing is everything, and the company’s decision to enter the acquisition business could be just right. The inhospitable lending climate and other factors have led to a decrease in prices on commercial real estate properties, so those with money in their pockets can take advantage of the bevy of opportunities to buy low. “The multi-family development industry is in a capital-constrained market both from an equity and debt perspective,” Wood Partners CEO Jerry Durkin said. “We expect that to continue through 2010 and beyond. The equity in this market is clearly more interested in acquisition than development at this point and that’s where we need to be. There are going to be some very promising opportunities in the multi-family market over the next few years, and Wood Partners expects to be very successful in acquisitions over the long haul.”

Prime purchasing opportunities notwithstanding, Wood Partners is still very much in the development game. “The firm currently has six development projects for which financing has been dedicated,” Jacobson noted. “Four of these projects that we expect will start construction within the next six months are in Oakland, Denver, Atlanta and Boston. For the other two, located in the North Carolina cities of Charlotte and Raleigh, we anticipate a start early next year.”

And acquisitions isn’t the only business area Wood Partners is looking to add to its repertoire. The firm also plans to make a gradual entrée into the property management business beginning in 2010 for the purpose of overseeing the operation and management of certain multi-family projects in its portfolio.