Milestone Closes Value-Add Fund at $1.1B
Capital will be deployed across the Sun Belt and Mid-Atlantic.
The Milestone Group has closed its sixth discretionary equity vehicle dubbed Milestone Real Estate Investors VI, hitting its hard cap of $1.1 billion. Capital is slated for deployment across value-add acquisitions throughout the Sun Belt and Mid-Atlantic regions.
Equity sponsors included public and private pension funds, insurance companies, foundations, family offices, and ultra-high net worth investors, as well as a sovereign wealth fund.
The vehicle will target undercapitalized and undermanaged, well-placed assets. Milestone will collaborate with sellers, engaging in recapitalizations, debt assumptions, entity acquisitions or portfolio purchases, as well as injecting rescue capital to facilitate refinancings and optimize capital stacks, according to a company statement.
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Fund VI has already closed on several transactions, including properties across South Florida, Northern Virginia and Denver. All acquisitions were executed at a substantial discount to replacement costs.
The company has invested upward of $9 billion across more than 80,000 units since its inception in 2003, according to its website. Just last month, Milestone acquired the 206-unit Casa Brera at Toscana Isles in Lake Worth, Fla., within the West Palm Beach – Boca Raton market. RAIA Capital Management sold the asset, after paying $44.4 million for it in 2018, Yardi Matrix data shows.
Earlier this year, the firm purchased Solaire Apartments, a community in Brighton, Colo., a suburb of Denver characterized by limited new supply. Inland Real Estate Group sold the 252-unit asset for $65.3 million, the data provider shows.
Milestone purchased these two properties at a discount to replacement cost between 20 and 25 percent. Additionally, the company assumed existing debt across both deals. Milestone planned to implement value-add strategies at each property.
Value-add plays in favour
Milestone isn’t the only company looking to capitalize on underperforming assets acquired at discounts to replacement cost. Earlier this year, Mesirow Institutional Real Estate Direct closed its fifth fund at $1.25 billion, aiming to engage in a similar strategy.
Value-add plays remain a focal point for investors, according to the PERE Investor Perspectives 2025 Study. This survey found that 37 percent of responders plan to commit more to this strategy in 2025 compared to last year, while another 37 percent consider allocating the same amount. Just 7 percent intend to reduce their capital exposure, while 19 percent are set to avoid this strategy.
