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John Haltmaier | Managing Director | |
jhaltmaier@castleplacement.com | |
(973) 699-7995
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https://www.linkedin.com/in/johnhaltmaier/ |
Overview
DVO Real Estate, a successful investor in multifamily properties, and its strategic partner, Cypress Equity Investments (CEI), a successful CRE development and ownership platform – have formed an acquisition platform to take advantage of the ongoing capital market dislocation in the multifamily sector.
Seeking value-add and pre-stabilized multifamily transactions based on strict criteria
Current pipeline of four transactions is expected to increase with hope of closing on 8-12 properties over the next 18-24 months at approximately $20 million of equity per deal
Immediate need for $18 million of equity to invest alongside $2 million from the sponsor to acquire a 175-unit value-add property in Kent, WA
Extensive track record – $1.7B equity invested with over $620MM realized at a 38% gross IRR (supporting data available upon request)
Opportunity
DVO/CEI believe the current market offers plenty of opportunities based on the following criteria
- Ability to buy with a 20%+ discount from peak pricing
- Going in cap rate of 5.5%+
- Assume conservative market rent growth
- Utilize untrended in-place renovated/stabilized rents
- Utilize fixed 5-7 year fixed rate (primarily agency) financing
- Leverage must be neutral/positive within first 12 month
- Targeting those properties that may offer IRRs in the high teens to low 20%
DVO / CEI – Strategic Partnership
Led by David Valger, DVO has invested $400+ million of equity since 2012 across four funds and sidecar investments
Founded in 2001, CEI is a successful commercial real estate platform, based in Los Angeles with a primary focus on multifamily
Michael Sorochinsky owns 100% of CEI and acquired a significant minority position in and became an active principal of DVO in 2018
CEI executes ground-up and value-add real estate projects across all asset classes in major markets, such as the Bay Area, Boston, Chicago, Denver, Los Angeles, Dallas, Phoenix, Miami and New York
Has purchased, developed and invested in over 160 projects with over $15 billion in total value
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 – 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
DVO Real Estate
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.