Innovatus Plans $800Mln in Investments; Targets Suburban Office Assets
September 25, 2018
By Tim Casey
Innovatus Capital Partners, which was formed two years ago, plans to invest $800 million by early 2020, primarily in suburban office markets.
The New York firm is targeting class-A office properties near major markets with technology, pharmaceutical, medical and educational companies because it believes those industries are expanding. It's also attracted to suburban office markets because it feels there's less competition among institutional investors than in downtown areas.
It currently owns six office buildings with 761,162 square feet in the suburbs of Atlanta, Dallas and Durham, N.C. It also has agreed to acquire a 330,000-sf building near Orlando, Fla. The company will continue to pursue deals in those markets, as well as other areas, particularly the suburbs of San Diego, Seattle, Austin, Texas, Nashville, Tenn., and San Jose, Calif.
The company is considering acquiring multifamily and mixed-use properties, but it expects mainly to focus on suburban offices. It plans to own assets it acquires for seven to 10 years before selling them.
Innovatus is seeking core-plus properties that are well-maintained and at least 90 percent leased. It is also attracted to buildings that come with excess land, where it can potentially add amenities - conference rooms or retail space - or develop a residential or mixed-use complex.
The company capitalizes its investments through Innovatus Structured Credit Real Estate Fund I, an investment vehicle that was launched last year, along with a network of institutional investors, family offices and high net-worth individuals. It declined to comment further on the fund.
It also lines up mortgages for 50 to 65 percent of a property's value. Innovatus was founded in 2016 by David Schiff and Andrew Dym, who previously were partners at Perella Weinberg Partners, a New York financial services firm. Its real estate group is led by Bradley Seiden, who joined the company last year from S2K Partners, a New York investment manager. Seiden previously was a principal at Investcorp International Inc., where he was responsible for real estate acquisitions and debt originations.
It completed its first deal last year, paying $45 million for two buildings with 223,475 sf at 430 and 530 Durham Drive in Durham. The National Institute for Environmental Health Sciences fully occupies the 530 Durham property, while tenants at its sister building include Verscend Technologies and law firm K&L Gates.
The company expanded its presence in that city earlier this year, buying the two-building Palladian Corporate Center for $55.6 million. The 201,008-sf property, at 200 and 240 Leigh Farms Road, is 98.4 percent leased to tenants that include the American Institute of Certified Public Accountants and Northwestern Mutual.
In July, Innovatus entered the suburban Dallas market with its purchase of the 163,923-sf Frisco Bridges Place in Frisco, Texas. The property, at 2600 North Dallas Parkway, is about 90 percent leased.
And earlier this month, it acquired the 172,756-sf 3400 Overton Park Drive in Atlanta. The building, which was constructed last year, is 80 percent leased to tenants that include Synovus Financial Corp. and McGriff, Seibels & Williams Inc., an insurance company.
Meanwhile, Innovatus earlier this year formed an operating relationship with Lincoln Property Co., a Dallas manager and developer of office properties. Lincoln will manage and lease Innovatus's properties in Frisco and Atlanta, while helping the company identify possible acquisitions throughout the country.
SOURCE: Commercial Real Estate Direct