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John Haltmaier | Managing Director |
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jhaltmaier@castleplacement.com |
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(973) 699-7995
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https://www.linkedin.com/in/johnhaltmaier/ |
Overview
DVO Real Estate, a successful multifamily investor, is raising $100 million for its third GP co-investment fund targeting attractive multifamily investment opportunities.
Pursuing three investment strategies: direct acquisitions of newer product in oversupplied markets, recapitalizations of failed value-add or lease-up deals, and special situation development projects including Los Angeles (Additional Density Unit) investments as well as select LIHTC investments in appropriate markets across the country.
Third in a series of DVO funds that invest alongside the sponsor as GP position in deals in which the LP investors are identified and committed prior to closing
For the first two strategies (expected to comprise 70-80% of the fund), investors receive unpromoted deal level economics net of DVO’s 1% asset management fee (and 3rd party fund expenses, such as audits and legal) – DVO as fund manager is expected to benefit from the promoted interest and fees paid by the third-party LP investors
Fund I net investor returns were 28.0% or a 2.47x equity multiple and Fund II’s first and only disposition to date achieved a 25.3% net IRR or 1.7x equity multiple
Fund Manager
DVO is a privately held real estate investor whose team of professionals successfully analyze and execute transactions based on their collective experiences as both developer, sponsor and investor in multifamily transactions.
DVO has invested in the acquisition or development of over 11,000 units since inception, with realized investments generating a 29.8% IRR or a 1.89x equity multiple at the deal level.
Principals have collectively invested in the acquisition and/or development of more than 200 projects, totaling over 32,000 multifamily units.
Illustrative Structure (Direct Acquisition and Recap)
Fund investors entitled to unpromoted deal level economics (bypassing typical LP waterfall) under the Direct Acquisition and Recap strategies (expected to be 70-80% of the fund)
- Fund manager earns 1% Am Fee, whereas promote and other fees are paid by 3rd party LPs (shown in red below)
- Fund manager earns 20% carried interest above 9% hurdle only under Special Situations strategy or if no conventional LP is present
Executive Management
David Valger | President and Founder
Responsible for DVO’s overall management, operations and investing activities. Extensive experience in all aspects of real estate investing and finance, including originating, structuring, underwriting and managing real estate and corporate private equity transactions valued at more than $6.3 billion. Previously, a partner with RCG Longview Debt Funds, originating, structuring and underwriting a variety of real estate mezzanine and preferred equity transactions, investing more than $450 million in over 25,000 multifamily units. Developed and led an exclusive joint venture with Fannie Mae Multifamily platform. Former member of the BOD and Executive Committee of the UJA/Federation of New York. BA, Binghamton University. MBA, Real Estate & Entrepreneurial Management, Wharton School at the University of Pennsylvania.
Michael Sorochinsky | Principal
Joined DVO in 2018 and is a significant minority owner. Founder and CEO of Cypress Equity Investments (“CEI”), a strategic partner of DVO. Oversees CEI’s $5 billion real estate portfolio. From 2001 through 2005, focused CEI’s investments in the value-add multifamily space, leading the purchase of over 70 properties comprising of 3,500 apartment units and retail. In 2010, before large numbers of developers jumped into the multifamily space, saw an opportunity to build Class A apartments in top markets around the US and led CEI to amass a development pipeline of nearly 5,000 luxury apartments with a projected value in excess of $2.8 Billion. Prior to 2001, practiced law at two international law firms – Perkins Coie and Milbank Tweed – representing creditors in distressed real estate debt and equity reorganizations. BA, University of California Irvine. JD, UCLA School of Law.
Ryan Shore | Managing Director, Acquisitions
Responsible for DVO’s acquisitions and dispositions. Over 12 years of experience in commercial real estate investing and finance, including originating senior debt and mezzanine loans, debt restructurings and equity investments. Originated and managed over $2.6 billion in total capitalization of real estate transactions. Previously an associate with Bank of America, managing a $500 million loan portfolio of retail, office and residential properties, restructured more than $1 billion in senior syndicated notes related to under-performing assets and originated over $140 million in new loans. BA, Finance, Boston University’s School of Management. MS, Real Estate Development, Columbia University.
Investment Committee
Committee, including independent members, reviews and approves each investment
V. David Valger
President and Founder
- 18+ years focused multifamily investing experience
- 120+ real estate transactions, 35,000+ apartments, $7.5+ billion of capitalization, $700+ million of equity invested
Dr. Peter Linneman
Emeritus Professor of Real Estate Wharton School, University of Pennsylvania
- Named one of the 25 “Most Influential People in Real Estate” by Realtor Magazine
- Renowned expert in real estate finance, economics and strategy
Allan Edelson
Senior Vice President, Walker & Dunlop
- 31-year veteran of the commercial real estate industry
- 26 years of experience in multifamily real estate finance
- Member of the Fannie Mae Advisory Council
Michael Sorochinsky
Founder & CEO, Cypress Equity Investments
- 18+ years of focused multifamily operations, investment and development experience
- 150+ real estate transactions, 9,000+ apartments acquired and/or developed
- $5+ billion in acquisitions and development
Specific Risks
- The fund has a limited operating history
- Reliance on the investment decision making and management of the principals
- Uncertainties related to the long-term fund life – up to 10 years (8 years remaining)
- Highly competitive market, making attractive opportunities at attractive pricing for multifamily properties potentially difficult to find
- Cyclical nature of real estate, the health of which depends on many factors, such as general economic conditions, interest rates, labor supply, among other things
- The timing and cost of construction and renovation is exposed to supply chain disruptions and availability of labor
- Senior debt financing terms may become more restrictive, requiring more equity, potentially generating lower returns than expected
- Private securities are speculative, illiquid, and carry a high degree of risk – including the loss of the entire investment.
