LOS ANGELES-Real estate investment manager Mesa West Capital LLC closes its third investment fund this month with capital commitments that exceed the firm's original target of $650 million, reports GlobeSt.com in an earlier story. The company's clear success stems from focusing on local economic growth on the east and west coasts, specifically in New York, Washington D.C., and Northern California, and job growth in the tech and energy sectors.
Mesa West experiences 80% of its volume on the east and west coasts and tends to look for opportunities in those markets where job growth is evident. "Because we are financing value-add projects, focusing on markets with job and employment growth is extremely important in mitigating risk," Jeff Friedman, Mesa West co-founder and co-CEO, tells GlobeSt.com. "In our existing loan portfolio, we have seen this occur on the coasts and in local markets with significant tech and energy jobs. As a result, we have targeted and have been most aggressive in these markets."
Although Mesa West is finding the most opportunities in these sectors currently, as the economy improves, the company will pursue opportunities in other markets when available.
Mesa West utilizes a relatively new investment strategy that creates a vehicle for pension funds to invest in commercial real estate through real estate debt, and the company has experienced notable successes and net returns for its investors. “Banks and life insurance companies make commercial real estate loans directly, but pension funds are not set up to do that,” says Friedman, who cannot comment directly about capital raising due to SEC regulations. “This provides an opportunity for pension funds to access commercial mortgages.”
The company launched its first fund in 2005 through 2007 when there was strong competition and increased availability of capital for the purpose of making loans. “A lot of pension fund investors are looking for current income and downside protection, and so real estate debt funds provide an attractive investment alternative."
The company's current fund already has $700 million in commitments and has an estimated net return of 12%.
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Kelsi Maree Borland
