Midloch Investment Partners Targets 3rd CRE Fund
The Midwestern-based company has found appealing candidates within its territory and also nationwide.
Real estate investment firm Midloch Investment Partners has closed another value fund for new investors, dubbed Midloch Value Fund II, with $60 million raised. The company set out to raise $50 million for the second fund but “demand exceeded our initial expectations, says CEO and Principal Andy Sinclair, in prepared remarks.
At the same time, the firm is aiming for $75 million of equity for its third fund, Midloch Value Fund III, which will be invested in multifamily and commercial properties in prime locations in the Midwest but also other areas.
Total capital targeted to raise and investments to secure through the three value funds totals $165 million. While Midloch has primarily focused on the Midwest where it has offices in Chicago, Milwaukee and Minneapolis, it doesn’t limit itself to those areas, and already has invested in markets in the Southeast, Sunbelt and Mountain West.
The company’s investment strategy is to team up with partners for mostly small-to-middle-market properties valued from $5 million up to $50 million. To date, its Midloch Value Fund II has acquired 13 properties in 11 transactions with a mix of multifamily, retail and land, office and industrial sites.
The company’s acquisition strategies have generally veered in two directions:
Go after distressed or discounted investments that have resulted from the banking crisis and Federal Reserve raising interest rates faster than many could plan for. The resulting investments are structured as equity or debt investments. An example of this is its 621,000-square-foot LaSalle Plaza, a mixed-use office property in Minneapolis.
Look for value-oriented investments in apartments, industrial or other commercial properties and partner with a local operating firm
According to the company, the Midloch Value Fund II has generated an internal rate of return to investors of 45%. The company generally targets total returns of 14% to 18%.
Despite market volatility from rising interest rates and fewer active lenders, the company has been able to find value-add real estate investments, Sinclair said.