Forum Partners has struck its first ever US deal via a strategic investment in a New York City-based residential property company.
The global private equity firm, which maintains offices in Greenwich, Connecticut and Santa Fe, New Mexico, to complement other locations in Europe and Asia, has taken a stake in The Dermot Company, a multifamily owner, operator, and developer established in 1991 that employs more than 100 real estate professionals and has a portfolio of 3,000 apartments worth around $1.5 billion.
Forum said the strategic investment not only was its first in the US property market but also underpinned the company’s objective to form sector-specific focused partnerships across the country. It is currently in detailed talks regarding another US platform, it revealed.
The firm envisages one or two such deals per year in scalable, operating businesses allowing investors to invest meaningful chunks of equity. One advantage of such an approach is to provide investors with proprietary deal flow, according to a Forum executive.
Forum’s initial investment includes an interest in The Dermot Company and the purchase of stakes in four New York City assets developed by the company.
The opportunity to invest in the firm is understood to have arisen because founder William Dickey is retiring from the company. Following the transaction and Dickey’s retirement, Dermot principal Steve Benjamin will lead the company as president and chief executive officer. The senior management is partnering with Forum in making the investment. Financial terms were not disclosed. However, Dermot expects to deploy more than $750 million over the next 18 months through new developments, recapitalizations, and value-add acquisitions.
The deal is a milestone in Forum’s evolution since being established in 2002. Russell Platt, chief executive officer, said: “After more than a decade of successful investing in Europe and Asia, we have expanded our focus to the US. This investment gives us a strong position in one of the most desirable US markets alongside a highly-regarded firm.”
Dermot’s Benjamin added: “Forum’s investment in Dermot is a tremendous endorsement of our model and our team.”
As well as being a first in the US for Forum, it is understood the deal also represents a departure from Forum’s usual practice of making investments on behalf of a private equity real estate fund. Instead, capital is coming from Forum’s balance sheet and some closely-guarded international investment partners that are keen on gaining exposure to the New York City multifamily market.
Platt further explained in a statement: “We’ve known Steve for many years and are very pleased to invest in The Dermot Company, which has created an impressive platform in New York City.” He highlighted Dermot’s 20-year track record of value-add investment and how it would function in conjunction with Forum’s access to long-term capital. “It is a powerful combination,” said Platt. “We are excited to work with Steve and his team to grow Dermot as we create scale and deal flow.”