Lucky charms

Shamrock Capital Advisors, the asset management arm of the Disney family, recently closed its second real estate fund on $104 million (€89 million). Like its predecessor, Genesis Real Estate Fund II will target a broad range of property investments in lower-to-moderate income neighborhoods in Southern California.

Mark Schaffer, a managing director at Shamrock, says the fund will make equity and debt investments between $2 million and $25 million in projects with a total value of between $10 million and $80 million dollars, a size comparable to the first vehicle.

“We believe that those opportunities will continue to exist,” Schaffer says of the urban in-fill projects.

But despite the similarities, Schaffer notes that there will be some slight changes to the Genesis strategy. “The significant difference is we will be able to invest in a broader geographic area,” he says, noting that the first fund was required to invest in Los Angeles County, while the second fund can invest in nine counties in Southern California.

The first Genesis vehicle closed in 2000 on $85 million and has pursued projects across a variety of property types and strategies. Earlier this year, the firm made a $3.5 million mezzanine debt investment in a new mixed-use residential development at Western Avenue and Wilshire Boulevard in the Koreatown section of Los Angeles. The project will feature 192 condominiums and more than 50,000 square feet of retail space.

In November 2003, Genesis made a $3.6 million mezzanine debt investment in the Douglas Building in downtown Los Angeles; the former office building was vacant for 17 years before being converted into condominiums with a ground-floor retail component. In August 2000, the firm invested $3 million of equity in the Hollywood Studios renovation, which converted former movie studios into 290,000 square feet of office space. In 2001, the property was sold for use as a film restoration and archive facility.

The Genesis LA Economic Growth Corporation, a non-profit organization founded by city officials, is the driving force behind the first funds. The investment vehicle was part of a larger public-private partnership, which looks to stimulate job growth, revitalize underutilized property and generate profits for investors.

According to press reports at the time, other investors in the fund included Bank of America, Wells Fargoand US Bank. Schaffer notes that a number of original investors returned to the second fund, with many increasing their commitments.

Shamrock Capital Advisors was established in 1984 to manage the property holdings of the Disney family, in addition to pursuing an alternative investment strategy—the firm recently raised $125 million for a private equity fund targeting Israel.