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Och-Ziff buys ski resorts for $374m

The New York-based firm made its first real estate equity investment in the niche property type through a 14-asset purchase.

Och-Ziff Capital Management is betting on ski resorts in its latest real estate purchase, according to an announcement last week.

The New York-based alternative investment manager bought 14 US mountain resorts from real estate investment trust CNL Lifestyle Properties for $374 million. Och-Ziff financed the deal with $130 million in equity and $244 million in financing from EPR Properties, a Kansas City, Missouri-based REIT, according to EPR’s third-quarter earnings report last week. EPR also purchased a ski resort, 15 amusement parks and five family entertainment centers from CNL, which is winding down its holdings. The deal is expected to close in the second quarter of 2017.

Capital for Och-Ziff’s portion of the deal came from Och-Ziff Real Estate Fund III, its latest North America-focused opportunistic fund. The firm closed the vehicle in 2014 on $1.5 billion. Investors include Oregon Public Employees’ Retirement Fund, which earmarked $125 million, and New Jersey Division of Investment (NJDOI), which allocated $100 million, according to PERE data.

The CNL deal is the firm’s first real estate equity deal involving ski resort properties. In 2015, the firm originated a loan for Pennsylvania’s Big Bear Ski Resort, sources with knowledge of the deal told PERE. In its latest purchase, Och-Ziff has acquired local ski resorts across the country, from California to Maine. The mountain resorts are largely destinations for local skiers, making them attractive income-producing opportunities, the source said. Och-Ziff plans to maintain the properties’ long-term leases.

“The ski resort assets are highly complementary to our diversified portfolio of real estate assets and we are excited to carry forward the strong stewardship provided by CNL Lifestyle Properties over the past 10 years ,” Steve Orbuch, Och-Ziff Real Estate's president, told PERE.

The firm’s third fund was set up to invest in a 50/50 split between traditional real estate assets such as multifamily, office, hotel and retail, and non-traditional real estate assets, including gaming, distressed land and residential, cell towers, parking, golf, debt and senior housing, according to NJDOI documents. Och-Ziff Real Estate Fund III was generating a 21.8 percent net internal rate of return as of September 30, according to the firm’s third-quarter earnings presentation.

Och-Ziff managed $2.1 billion in assets as of September 30, according to the earnings report.