Ivanhoé JV Joins Goldman, Greystar in 27 M-F Properties

Ivanhoé Cambridge has made its largest multi-family investment, joining a partnership of Goldman, Sachs & Co. and Greystar in the $1.5 billion acquisition of 8,010 multi-family units from Equity Residential.

 By Gail Kalinoski, Contributing Editor

Spanish-style Montecito in Valencia, Calif.

Ivanhoé Cambridge of Montreal has made its largest multi-family investment, joining a partnership of Goldman, Sachs & Co. and Greystar Real Estate Partners in the $1.5 billion acquisition of 8,010 multifamily units in the United States from Equity Residential.

The announcement comes three months after Greystar and the Real Estate Principal Investment Area of Goldman, Sachs & Co. agreed to buy the 27 high-quality properties featuring Class A and Class B units in core U.S. locations with high barriers to entry and strong economic and job growth potential. More than 1,500 units are located in Phoenix and over 1,000 are in Denver. Other regions include Washington, D.C.,  northern New Jersey, South Florida, and the San Francisco Bay Area.

The amount of Ivanhoé Cambridge’s investment in the partnership was not disclosed.

“I can say that this is our largest investment in the multi-residential segment, globally speaking,” an Ivanhoé Cambridge spokesperson told Commercial Property Executive.

A real estate company that invests, develops, manages assets, and offers leasing and operations services, Ivanhoé Cambridge is a real estate subsidiary of the Caisse de depot et placement du Quebec, a leading Canadian institutional fund manager. The firm has assets in 20 countries valued at more than $35 billion. The Ivanhoé Cambridge representative said about $3.7 billion has been invested in the U.S. office market and more than $2 billion in U.S. multi-family assets.

“Ivanhoé Cambridge’s significant participation in this transaction aligns perfectly with our strategic plan to seize promising real estate investment opportunities and increase our critical mass with a well-distributed diversification in priority U.S. markets,” Sylvain Fortier, executive vice president, Residential and Hotels, said in a news release.

“We are pleased to begin this relationship with new partners who believe in the strength and growth of this market segment in the United States,” Bob Faith, Greystar’s chairman and CEO, said in the release.

“This transaction fits perfectly in our investment strategy to acquire assets with strong existing cash flows at values below replacement cost located in markets with high employment and population growth,” Faith added.

In February, Greystar and Goldman, Sachs worked with CBRE Capital Markets Debt & Equity Finance group to secure more than $1 billion to finance the portfolio purchase. CBRE secured seven-year Freddie Mac loans for each of the 27 properties, loans that were non-crossed and floated over 30-day Libor. The two-stage funding was to have concluded in late March, allowing Greystar and Goldman, Sachs to close on the acquisitions.

The transaction valued the properties at about $187,000 per unit. Most of the multi-family properties were built in the years 1999-2000. The partners have agreed to fund a multi-year maintenance and renovation program for all the assets.

While most of Ivanhoé Cambridge’s recent acquisitions, both in the U.S. and abroad, have been in the office market, the firm did invest $234 million in the Silicon Valley multi-family market in October. The company acquired Kimberly Woods, a 208-unit apartment building in San Jose, Calif., and teamed up with Shea Properties to develop a $171 million, luxury, two-building apartment community in the same city. ICS Transit Village wall have 648 units, when it is completed in spring 2015.