The Carroll Organization is poised to see considerable growth over the next few months and years. Not only is the Atlanta-based multifamily real estate specialist on track to quadruple its property holdings in the next two to three years, but PERE understands it also has received its first sizeable separate account mandate.
Sources familiar with the matter have revealed that Carroll Organization has formed a $100 million separate account with an undisclosed institution to invest in Class A and B+ multifamily properties throughout the Southeast and mid-Atlantic regions within the US, specifically from Texas to Florida to Washington DC. Currently, Atlanta and Houston are the firm’s biggest markets.
On behalf of its separate account client, the Carroll Organization expects to acquire and manage value-added and core-plus real estate investments. In addition, the firm hopes to produce attractive risk-adjusted returns through the account, presenting clear upside through repositioning and active management.
This separate account marks a significant leap in Carroll Organization’s investment pattern. Indeed, it is the largest vehicle the firm has managed on behalf of institutional capital. Prior to this mandate, the firm typically raised smaller co-investment vehicles and, through those funds, would make acquisitions with joint venture partners.
In December, Carroll Organization closed on $30 million for Carroll Fund II and its sidecar vehicle. Through the fund, the firm has been serving as a minority partner in joint venture acquisitions. For its first fund in late 2011, Carroll Organization garnered a little more than $50 million in equity commitments. With leverage, that fund acquired $150 million worth of multifamily real estate, or about 1,600 units.
News of this investment mandate comes immediately on the heels of Carroll Organization receiving a cash infusion from private equity and venture capital firm Hanna Capital to help grow its footprint and accelerate its growth. Hanna’s investment, which garnered it a 10 percent stake in the firm, is not connected to this separate account vehicle.
In an interview in February, Patrick Carroll, founder and chief executive officer, told PERE that his firm is looking “to accelerate our business plan. We are in the process of going from executing equity transactions on a one-off basis to a more discretionary model,” he said.
Carroll noted that his firm also is “trying to get to 20,000 units owned in the next few years.” Currently, Carroll Organization owns or has ownership stakes in approximately 5,000 multifamily units.
All told, the new separate account is part of a series of events linked to the Carroll Organization expanding its reach and growing at a rapid rate. Over the past 18 months, the firm has completed more than $400 million of multifamily acquisitions, and it expects to pass the half-billion dollar mark by the end of the second quarter. With all this growth and new activity, it’s not surprising that the firm is looking to fine-tune its business plan in the months ahead.