Toronto-based private real estate manager Starlight Investments teamed up with two pension funds, to form the a joint venture, in which Startlight will hold a minority stake, PERE understands.
“The areas we’re in we really like because they’re the high-growth markets”
– Raj Mehta
The partnership among Starlight, PSP Investments and Alberta Investment Management Corporation will amount to a $1.3 billion effort. Starlight will be funding its commitment through balance sheet capital, a source familiar with the situation said.
The three firms are acquiring Class A, garden-style apartments in the suburbs of Atlanta, Austin, Dallas, Denver, Orlando, Tampa and Phoenix. In its first buy, the JV acquired Parkhouse Apartment Homes, a 465-unit property built this year in Denver. A subsidiary of public developer Lennar built the complex with equity from undisclosed partners. Parkhouse includes amenities such as pools, fitness facilities, club houses and a dog park.
This recent club deal, Starlight’s first with more than one partner, will double the firm’s US footprint, Raj Mehta, Starlight’s head of private capital and partnerships, told PERE. Starlight plans to expand its target markets through the partnership, too.
Terms of the club deal and its first transaction were not disclosed.
Multifamily specialist Starlight, founded as a family office 20 years ago, began investing in the US in 2013 and now manages about 11,000 units across 13 markets, as well as 24,000 units in Canada. Starlight has a 12-year partnership with PSP to invest in Canadian real estate across property types, while AIMCo is a new relationship.
Mehta highlighted positive net migration, as well as proximity to employers moving to suburban locations, such as Apple in Austin and Toyota in Dallas, as growth drivers in its current footprint.
“The areas we’re in we really like because they’re the high-growth markets,” Mehta said. “They’re nice areas to live with good schools and good retail, and are accessible to the downtown core.”
AIMCo has been investing in US real estate since 2010 and now has about 13 percent of its C$12.7 billion ($10.2 billion; €8.6 billion) real estate portfolio stateside, a spokesman said. He declined further comment on the partnership. The pension fund’s real estate investments returned 4.6 percent in the year ending December 31, under its 5.8 percent benchmark, according to its annual report.
PSP has invested in US property markets for over a decade. The pension fund’s C$20.5 billion real estate portfolio was 43 percent invested in the US and returned 10.8 percent in the year ending March 31, per its annual report.