From left: Andy Wallace, Ron Kutas and Nate Kline are the founders of One Wall Partners, a real estate investment and management firm focused on workforce, transit-oriented housing in northern New Jersey and other major markets. — Courtesy: One Wall Partners
By Joshua Burd
A real estate investment and management firm has launched a $50 million fund to acquire transit-oriented, workforce housing in New Jersey and elsewhere in the Northeast.
One Wall Partners, which is based in Newark, is raising the preferred equity fund as an outgrowth of its existing business model. The firm has built a portfolio of nearly 3,500 apartments in New Jersey and Pennsylvania since its launch in 2012, with a focus on workforce and lifestyle-oriented housing around mass transit hubs.
The newly announced Nova Appian Preferred Income Fund I is open to accredited investors seeking to invest in real estate. According to a news release, the fund will seek eight to 15 multifamily properties in the Northeast, initially focusing on Pennsylvania, New Jersey, New York and Connecticut.
“Preferred equity provides an extra margin of safety for investors and the workforce housing asset class has been resilient and stable during various economic cycles,” said Nate Kline, a partner with One Wall and the firm’s chief investment officer. “There are a number of powerful, underlying drivers that support our focus on workforce housing, including a significant supply and demand imbalance that shows no signs of abating.
“Sustainable social and demographic trends are combining in a perfect storm to drive increased renter populations. Aging baby boomers are downsizing from large homes and moving closer to cities, growing minority populations who gravitate toward high living cost employment centers are more likely to be renters, most millennials prefer to rent or cannot afford to buy and many are delaying marriage and kids, while generation Z mostly lives with their parents today and will be flooding the rental market soon.”
The term of the fund will be five years with a preferred return hurdle of 9 to 10 percent and a target return of 11 to 13 percent annualized, net of fees and expenses, the news release said. One Wall has committed $2.5 million to the fund, already has millions of dollars in soft commitments from investors and is in discussions with three institutional investors for an additional $10 million to $15 million.
As of late last month, the firm had identified up to six transactions totaling more than 1,800 apartment units and representing preferred equity investment of up to $27 million.
“One Wall has demonstrated conservative property underwriting, thoughtful structuring and an effective management infrastructure that supports institutional quality asset management,” said Ron Kutas, partner and chief operating officer.
Historically, One Wall has raised capital on a deal-by-deal basis, working with more than 100 investors, including high-net-worth individuals, family offices and institutions, some of whom received preferred equity, the news release said. It owns and manages its 3,500-unit portfolio, the firm said, noting that it has another 800 units under contract in New York and Pennsylvania.
It’s now adapting its structure for the preferred equity fund, given that investors have responded well to individual offerings.
“Our expertise in sourcing, screening, financing, managing, rehabilitating and selling workforce housing assets positions us to excel in all market environments,” said Andy Wallace, partner and CEO.