Just got off a call with a pension fund advisor that's investing LP equity on behalf of two large pension funds. Here's what they're targeting: - Core Plus Multifamily - Top 25 MSAs outside of the Northeast and Midwest - 2010 vintage or newer - 4.5% cap going-in using T-3 revenue and pro forma expenses. Stabilizing above a 5.0% cap. Not concerned with negative leverage, just looking for the best assets in the top markets. The recent move in rates hasn't changed their outlook. - 13-15% levered IRR over 4-5 years, but can hold much longer given their evergreen structure. - They're ok with a light value-add business plan, e.g. $10-15K per unit. - Equity check sizes of $15M-$80M

I spoke to an LP equity investor yesterday. Here are the notes: - Strategy: Value-add, no ground-up development - Asset Type: Open to a variety. Portfolio is currently multifamily, industrial, retail, self-storage, etc. - Vintage: Needs to be 1980s or newer. - Location: Open to most MSA's, but typically avoid the northwest and northeast. - Demographics: Want to see minimum household income of $70K+. They reviewed their portfolio and found that the deals that were underperforming are in markets below the $70K threshold. - Debt: Prefer it to be fixed rate. Avoiding floating rate bridge debt. - Hold period: Typically underwrite 5 years, but can go to 7 if needed. - Check size: $5M - $15M - Returns: Looking for a project level IRR of ~17%. They don't have a minimum equity multiple. They want to see a minimum stabilized YOC of 8% for multifamily and 9% for other asset types. - Structure: They prefer to be the sole LP, but can also be part of a syndication as long as they have 51% of the equity and control over major decisions. - Co-invest: Mostly doing 90/10 JVs - Sponsor: They don't have specific requirements, but tend to work with groups that have grown out of the "friends and family" equity raising stage.

If you’re buying a short-sale in SF, you can avoid the 6% transfer tax by negotiating a note purchase with the lender and deed-in-lieu with the seller. All to be executed and closed simultaneously through escrow. Disclaimer: Consult your attorney and tax advisor 🙂