Macquarie Capital, the advisory arm of Australian financial services company Macquarie Group, has acquired a minority stake in Stonehenge NYC, a multifamily real estate investment manager and operator. The transaction marks the first entity-level investment that Macquarie has made in a US real estate platform since the global financial crisis. Terms of the deal were not disclosed.
Stonehenge NYC, which was founded 25 years ago, owns approximately $3 billion of apartments in Manhattan. The company began investing with a division of the Caisse de dépôt et placement du Québec, now Ivanhoé Cambridge, in 1995 and over the years has also formed partnerships with other institutions such as Public Sector Pension Investment Board, SL Green Realty and Invesco Real Estate. Its portfolio comprises 23 income-producing properties in the New York City borough in partnership with private and institutional investors.
“Macquarie Capital’s involvement with our platform will allow us to enhance Stonehenge’s visibility amongst institutional investors ensuring that our business continues its growth and strengthens its position in the Manhattan multifamily market,” said Ofer Yardeni, chairman and chief executive of Stonehenge NYC.
Since 2005, Macquarie has been making platform investments in its clients to help bolster capital raising efforts for those entities. “We have found that global investors, sovereigns and pensions, respond and react differently to a potential investment opportunity when the advisor is actually aligned and has a stake in the operator,” said Eric Wurtzebach, senior managing director at Macquarie.
Macquarie also is getting more active in entity-level investments because of investor demand. “With the investors we work with, many of them have a desire to do a series of transactions with a select operator or sponsor,” he said. “They’ve spent a lot of time on the front end doing due diligence on the manager, and their underwriting of that manager is validated by our entity level investment.”
Wurtzebach said that Macquarie had been actively seeking entity-level investments in the US post-crisis, but previously had not found the right partner. He said the firm identified Stonehenge as an attractive partner in US real estate because of its geographic and sector focuses. “Long-term, we believe in the fundamentals in the multifamily market,” he said. “Specifically, Manhattan is going to perform better than the rest of the nation. The multifamily sector supply in Manhattan is not going to keep up with demand.”
Outside of the US, recent entity level transactions by Macquarie include a joint venture with GIC to acquire a majority interest in student housing group Iglu, in January 2014, and the purchase of a stake in Logos Property Group, an Asia-focused logistics developer and investment manager that same year. Macquarie also partnered last June with Peel Land and Property Group to launch a new UK logistics management business called Peel Logistics, seeded with capital from both partners.
The company said a number of platform investments are in the pipeline for the next 18 months to 24 months across US, Europe and Asia.