Sares-Regis Closes Second Multifamily Fund at $300M

The fund will seek to acquire nearly $850 million worth of multifamily assets in its target markets in the Western U.S.
©2010 John Swanda Swanda & Schindler Digital Photography

Ken Gladstein, President, Sares-Regis Multifamily Value-Add Fund II, ©2010 John Swanda
Swanda & Schindler Digital Photography

Irvine, Calif.—Sares-Regis has closed its Sares-Regis Multifamily Value-Add Fund II, having raised over $300 million in total equity commitments. When leverage is factored in, the fund will seek to acquire about $850 million of multifamily assets in its target markets.

The fund plans to capitalize on the strong multifamily fundamentals in the western United States, as well as the potential to create value through the renovation and repositioning of well Class B properties, according to Ken Gladstein, the fund’s president. The fund is targeting assets in northern and southern California, as well as the Seattle, Portland, Denver and Phoenix metro areas.

Investors in the fund include insurance companies, public pension funds, wealth managers and other institutional investors from the United States, Europe and Asia.

“The strategy of the fund allows for immediate deployment of investor capital to take advantage of value-add acquisition opportunities in our pipeline,” Gladstein said.

So far, the fund has acquired three assets that represent about 20 percent of its total commitments. The first two properties are in the Los Angeles metro market, while the third is in San Diego. A fourth investment in Denver is expected to close in the next few weeks.

Equity financing for multifamily deals isn’t quite as robust this year as it was last year. According to the National Multifamily Housing Council’s latest quarterly survey on apartment conditions, which was released in July, its Equity Financing Index was 44. That was the result of the index slowly inching downward since 2015, when it was generally higher than 50 (meaning that, on balance, equity finance is more available than three months before).

That’s probably a function of the suspicion among investors that the investment market is seeing at least the beginning of a new price bubble. A majority of respondents in the latest survey (53 percent) characterized the market as “frothy,” which is to say that investors will be adequately rewarded if recent NOI trends continue and cap rates don’t back up. No one believes apartment are undervalued.