IEC closes $300m fund after three months in market – Exclusive

Interstate Equities Corporation closed its latest multifamily fund at its $300 million hard-cap after three months of marketing, PERE has learned.

The firm launched IEC Institutional Fund IV in March with a $250 million target and saw a 100 percent re-up rate from its previous value-add fund, which closed in 2015 on $200 million. The firm also added one new investor to its latest fund. PERE understands that IEC held its first and final close in June.

Find IV’s investor base includes pension funds, university foundations and family offices, IEC president Marshall Boyd told PERE. Boyd credited IEC’s director of equity formation, Peter Casey, who has worked at the firm for nearly five years, for helping close the fund quickly. Boyd noted that few of IEC’s peers have a dedicated position for investor relations, and added that the firm has benefited from maintaining regular communication with investors.

“We talk to them constantly,” Boyd said. “That helps with the speed piece considerably.”

Fund III, IEC’s first institutional discretionary fund, closed after 12 months of marketing. Previously, the firm had made investments through separate accounts and joint ventures.

With capital from the fund, the firm plans on continuing its value-add investment strategy of redeveloping older multifamily assets across California, including areas around San Jose, San Francisco, Orange County and San Diego, with investments split between the northern and southern regions of the state. The firm focuses on apartment communities that have been neglected by management or need strategic renovation, ranging from family-owned locations to larger institutional properties with 20-400 units. It aims to add value to assets built in the 1960s and 1970s by upgrading those properties and bringing them back up to code.

“We target quality living for average working class individuals and families,” Boyd said, noting the tenants are often middle class, including blue collar workers and young college graduates.

IEC did not use a placement agent and said it did not currently have a specific return target. Its last fund had a targeted net internal rate of return in the mid-teens and an investment multiple of 1.5-1.7x. Boyd would not comment on return figures for previous funds and did not disclose total assets under management.

The firm has yet to deploy any capital from Fund IV. In June, IEC acquired Roman Villas, a 28-unit apartment complex in San Diego, as one of its Fund III investments.

The Los Altos, California-based firm was founded in 1981 and is now run by the second generation of the Boyd family: co-presidents and siblings Marshall Boyd and Julia Boyd Corso. Prior to joining IEC in 2005 and 2007 respectively, Julia Boyd Corso worked in management consulting for Accenture while Marshall Boyd worked on the investment team at TA Associates and the investment banking team at Credit Suisse First Boston, according to their LinkedIn profiles.