Interstate Equities In Contract for First NorCal Deal After $200MM Equity Raise

Interstate Equities, IEC Institutional Fund III, Interstate Equities Corporation (IEC), Bay Area, Citra Apartments, San Rafael, Marin Gardens Apartments

Interstate Equities, IEC Institutional Fund III, Interstate Equities Corporation (IEC), Bay Area, Citra Apartments, San Rafael, Marin Gardens ApartmentsBy Jon Peterson

Los Altos-based Interstate Equities Corporation is now under contract to buy an apartment property in Northern California as its first deal in the region for its new commingled fund, the IEC Institutional Fund III. The company declined to give out any details until the transaction has closed. The company also has a deal under contract in the Los Angeles area as well. These would be the first two investments for the fund.

“We hope to be able to close on both of these investments in the near future, and they will be a good fit for our portfolio,” says Marshall Boyd, co-president of IEC. He is jointly leading the firm with Julia Boyd Corso, also co-president of IEC.

[contextly_sidebar id=”4o5mNN2thtKFZnHHrM2uMSrlT3d6VU0s”]The company just announced the completion of a $200 million equity raise for Institutional Fund III, the company’s first commingled fund. All of its previous investment funds have been done with a single investor in a separate account structure. The company raised the capital itself without a placement agent, and the lead person on this was Peter Casey, director of equity formation.

The investors in the comingled fund are a mixture of family offices, endowments, foundations and corporate pension funds. The leverage component on the fund figures to be somewhere in the range of 60 percent. The targeted returns for the fund are a mid-teens net IRR.

Fund III has a value-added investment strategy, and its focus will be on buying existing assets only. It will be looking to make some improvements to each property that it buys. These improvements could be putting in new carpet or adding amenities like a washer/dryer. “Our goal with each property is to buy a complex, put in the improvements and then sell to a family office or institution. The holding period on our assets is likely to be in the range of three to seven years,” said Boyd.

IEC is targeting Northern California one of its primary markets. One of its main areas of interest has been with apartments on the Peninsula. The company does not look at properties in San Francisco, mainly because the city has rent-controlled laws in place. Generally, it looks for properties from 20 to 400 units that are located in infill locales.

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