By Gail Kalinoski
Los Angeles—Two Los Angeles-based firms—Belay Investment Group LLC and Arc Capital Partners LLC—have launched a joint venture focused on acquiring and repositioning up to $150 million of multifamily and retail properties in California and Texas.
Known as ArcWest Partners, the joint venture will target value-add and opportunistic acquisitions in growing urban submarkets with strong millennial demand. The partners are considering numerous opportunities in both states.
“While we are being extremely selective at this time in the recovery cycle, we are currently pursuing a $350 million pipeline of properties located primarily in Los Angeles and Houston,” Arc Capital Partners Managing Partner Neville Rhone told Commercial Property Executive.
Belay’s investment comes from Belay Partnership Ventures II LP, a fund anchored by a $200 million commitment from the California State Teachers’ Retirement System (CalSTRS) and is targeting $500 million in equity. Belay is a registered investment advisor that pursues real estate investment opportunities for institutional investors and is wholly owned by its four managing principals who have both buy and sell real estate experience as principal investors and senior management at institutional investment management and advisory firms.
“We are very excited to partner with Arc Capital Partners and believe strongly in their millennial-driven investment strategy,” Barry Chase, managing principal of Belay, said in a prepared statement.
He said Arc Capital’s “successful track record of investing in urban markets” attracted Belay to the joint venture.
Rhone and fellow Managing Partner Quincy Allen, who had previously been at Canyon Partners together, founded Arc Capital Partners in 2013. Focused on middle-market properties in urban locations that can be repositioned to appeal to millennials, the firm currently has a $100 million portfolio with properties in top millennial markets like Austin, Texas, and San Diego, Calif.
“Millennials are changing the fabric of what defines thriving urban real estate,” Rhone said in a prepared statement. “Forming ArcWest Partners with Belay allows us to build upon our vision with a partner that provides more than just investment capital.”
Allen noted that they are seeing “many mispriced, middle-market opportunities and look forward to collaborating with Belay to build our portfolio and grow our platform.”
Mike DiRe, director of real estate for CalSTRS, said in a prepared statement that CalSTRS has “been a long-term supporter of emerging managers.”
“As the lead investor in the Fund, we are pleased to be providing a path of growth for Arc Capital Partners and look forward to sharing in the success of ArcWest Partners,” he added.
In June 2014, Arc Capital Partners announced a strategic partnership with Columbia Pacific Advisors, an alternative investment firm that said it would provide operating and investment capital to Arc Capital to pursue value-add and opportunistic investments across the Western United States.
Stan Baty, principal at Seattle–based Columbia Pacific, also noted his firm liked Arc Capital’s focus on the millennial market.
“We believe Neville and Quincy’s track record together at Canyon Capital and backgrounds in acquistions, development, asset management and operations position them for success in a space that has been largely vacated by multi-billion dollar funds yet remains too complex for smaller investors to pursue,” Baty said in prepared remarks.