Joseph Stecher, the former chief investment officer of the real estate fund of funds business at Morgan Stanley Alternative Investment Partners (AIP), has formed his own US real estate investment firm.
According to Stecher, who left Morgan Stanley AIP earlier this year, his new firm, Candlewood Investments, specialises in both secondary investments as well as co-investments in the US.
Currently, the New York-based firm has formed a separate account to seek out secondary investments across all real estate asset types in the US. Through the mandate, Candlewood is seeking secondary investments that are at least $50 million or larger.
Stecher told PERE that Candlewood’s secondaries strategy is focused more towards larger deals. In addition, the firm is looking for fund interests with “high-quality managers” that have not been broadly marketed.
Meanwhile, Candlewood’s co-investment strategy is geared more towards smaller deals. The firm is looking to co-invest in individual US properties alongside small- to mid-sized fund managers with good managerial skills that are short of the capital required to make a deal.
“We look at great funds that have missed their fundraising target, so they have less capital than they need to make a particular investment,” said Stecher, adding that in these situations, Candlewood would come in with somewhere between $10 million and $35 million, or “half the equity required to buy that building”.
Although Stecher said he wouldn't rule out the possibility of launching a fund somewhere down the road, he said he thinks it would be more likely that he'd continue to do more separate accounts rather than invest through commingled vehicles in 2013.
To read more on Candlewood Investments, see this month’s PERE Magazine.