One of the nation’s largest commercial real estate lenders and deal makers has partnered with a Canadian counterpart to make preferred equity investments in multifamily, student housing, and manufactured housing properties.
Denver-based Walker & Dunlop Investment Partners (WDIP), a wholly owned subsidiary of Bethesda, Maryland-based Walker & Dunlop (NYSE: WD), and Montreal-based Ivanhoé Cambridge, said in the Sept. 14 announcement that they "will focus on identifying opportunities with stabilized properties, primarily in top 25 MSAs, with a range of three- to 10-year investment horizons."
WDIP president Sam Isaacson said in the release, "Our product is designed to help sponsors achieve their desired leverage targets with incremental proceeds at a much lower cost of capital than common equity."
Charles-Antoine Lussier, senior vice president at Ivanhoé Cambridge, said the WDIP partnership is part of its broader strategy to further diversify its U.S. residential investment portfolio across markets and risk spectrum. The company says that through its subsidiaries and partnerships it now has interests in more than 1,100 buildings, primarily in the industrial and logistics, office, residential, and retail sectors.
"We have worked with them for many years, and we are glad to expand our existing relationship to provide incremental proceeds and more flexibility across the capital structure," Lussier said.
Investments in Texas and Tennessee launch new phase in old relationship
The partnership has already gotten down to business. Multi-Housing News Online reported Sept. 16 that they’ve put about $4 million in preferred equity in a deal with Pegasus Real Estate to buy a 240-unit multifamily property in San Antonio, Texas, and $5.6 million in a joint venture with Valor Residential to buy a 267-multifamily property in Knoxville, Tennessee.
Walker & Dunlop and Ivanhoé Cambridge have done business together since at least 2012, according to Multi-Housing News Online, including in 2017 when Walker & Dunlop arranged $1.9 billion in Freddie Mac loans for the purchase of Monogram Residential Trust, a multifamily real estate investment trust (REIT), by a group led by Greystar Real Estate Partners that included Ivanhoé Cambridge.
This time around, the joint venture will focus on larger markets, particularly in Sun Belt states and major university towns, but they’re open to suggestion.
“While we are targeting the top 25 MSAs, we’re also open to smaller markets as we anticipate that there might be a demand for what we’re offering in those markets as well,” Lussier told Multi-Housing News.
The Millionacres bottom line
Investment in multifamily just keeps heating up, and players like the members of this joint venture and many more are out scouring for good deals, adding to the competition for real estate investors of all sizes.
Also of note here is what this joint venture is not interested in right now: the single-family rental (SFR) -- which has attracted widespread attention from institutional and individual investors -- and build-for-rent (BFR) segments.
"We’ve yet to see demand for stabilized properties and portfolios, but that may change over time," Isaacson, the WDIP president, told Multi-Housing News Online.