Ivanhoe Cambridge Expands Apartment Investment Strategy to San Francisco

Lower Nob Hill, Noe Valley, Inner Mission, Alamo Square, Duboce Triangle, Westwood Park, Mission Dolores, San Francisco apartment, Ivanhoé Cambridge
735 Taylor Street
735 Taylor Street

By Jon Peterson

Montreal-based Ivanhoe Cambridge has made its first move into the San Francisco apartment investment market with a new joint venture partnership with San Francisco-based Veritas Investments.

There is the possibility of this partnership becoming quite large in the future. “We have similar apartment investment programs in London and New York City that now have a combined gross value of $1 billion. It would not surprise me if our investments in San Francisco would get to this level in the future,” says Sylvain Fortier, executive vice president of residential, hotels and real estate investment funds for Ivanhoe Cambridge.

There are many attributes that Ivanhoe likes about the San Francisco apartment market. “First of all it’s a gateway city, which makes it attractive. There is the fact that it’s hard to add new supply to the market. There also is very good demand led by tech companies and other businesses as well,” said Fortier.

Ivanhoe is the lead equity investor in the partnership with Veritas and will hold the majority ownership in the venture. Veritas is the operating partner and will oversee any of the day-to-day duties of any properties in the partnership. This company did not return phone calls seeking comment for this story. Both firms in the venture must agree on any properties to be acquired for the relationship.

The first deal in the venture is a portfolio of nine properties totaling 159 units. This will be a transaction pegged at close to $50 million, and the assets are in the process of being acquired. They are located in the neighborhoods of Lower Nob Hill, Noe Valley, Inner Mission, Alamo Square, Duboce Triangle, Westwood Park, Mission Dolores and Cow Hollow. The current occupancy of the portfolio is in excess of 90 percent.

The overall investment strategy for the partnership is to acquire existing assets only that have a value-added element to it. “We are looking to invest in properties where a significant portion of the return on the property will be based on the value we create going forward with a planned renovation on the asset. The targeted returns for these deals is a mid-teens IRR,” said Fortier.

Ivanhoe will not be afraid of buying or investing in smaller deals. “I would think that there is a possibility that we could invest in a property that might be as small as 10 to 12 units and have an investment of $10 million to $15 million. We can do this as we are on a long-term basis given we are trying to assembly a large portfolio of assets and not just interested in large assets,” said Fortier.

Ivanhoe Cambridge is the real estate subsidiary of the Caisse de dépôt et placement du Québec, one of Canada’s leading institutional fund managers.

3035 Baker Street
3035 Baker Street
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