Cortland has closed its Cortland Enhanced Value Fund, securing $1.5 billion in commitments. The value-add, multifamily fund is meant to capitalize on targets in the Sunbelt and Mountain West.

Cortland says approximately one-quarter of the commitments were from foreign investors, and 80% were from institutional investors. 

Cortland’s Jason Kern added, “Cortland is now capitalizing on discounted asset prices and higher yields in an improving operating and capital markets environment. By exceeding our initial target by 50%, it’s clear the opportunity to invest with Cortland in this sector at this time resonated strongly with investors.”

Headquartered in Atlanta, Cortland manages and is invested in, directly or indirectly, over 250 apartment communities comprised of over 80,000 homes in the US with regional offices in Charlotte, Dallas, Denver, Houston, Orlando, and Phoenix. 

BGFP International, a strategic partnership between BG Capital, Saoud Development, and FreezPak Logistics, has secured $72 million in funding from Valley National Bank, the Israel Discount Bank of New York (IDB), and Nuveen Green Capital to develop a 275,000-square-foot cold storage facility in Jacksonville. Construction is underway and expected to be completed in November 2024.

The debt execution was originated by Tyler Huffman and Joseph Byrne of BG Capital, which consists of Valley National Bank and IDB contributing as the senior lenders and Nuveen Green Capital providing Commercial Property-Assessed Clean Energy financing (CPACE).

The facility, to be leased exclusively by FreezPak Logistics, spans over 20 acres and will offer 53,000 new pallet positions, 212,000 square feet of freezer space and a 41,000-square-foot cooler dock. Users will have access to blast freezing, cross-docking, transportation, repacking, overseas container plug-ins, and USDA inspections. The facility will also include 34 loading docks, 132 trailer parking stalls, 90 container plug-ins, and 67’ clear-height ceilings.

The Jacksonville facility will be BGFP International’s third built-to-suit location within its national expansion program.

Switchyards

Atlanta-based coworking company Switchyards is gearing up for a nationwide expansion, planning to open hundreds of coworking locations following its $5M capital raise, according to Axios.

Founded in 2019, Switchyards operates 15 “work clubs” around the Southeast. It describes its coworking concept as “neighborhood-focused,” with locations in residential areas to offer a shorter commute and 24/7 access. 

Its latest series D round was led by Bullpen Capital and raised $5M. Other investors include Overline and existing investor Cercano. To date, the company has raised $10.5M across rounds, its previous efforts closing last year and in 2020. 

With the funding, Switchyards is bringing 10 locations to suburban Atlanta, Nashville, Charlotte and other cities in the Southeast, according to Rough Draft Atlanta. It hopes to open locations “in every residential neighborhood across the country,” and grow to 200 clubs nationwide by 2029. 

Switchyards’ revenue has doubled every year since 2021, CEO and founder Michael Tavani told Axios. 

The popularity of remote and hybrid work continues to climb, with 46% of companies in a KPMG survey embracing the latter in the past year. In tandem, so does the demand for workspaces away from home and the office with a short commute and productive atmosphere. 

Enter: Coworking. Just over 6,250 coworking spaces were open in the U.S. at the end of 2023, and that rose 6% to just shy of 6,600 by the end of the first quarter, Coworking Cafe reports.  

While the coworking sector is thriving, the larger office sector is in turmoil, with an unprecedented 1.2B SF available in the U.S. as of April 8. 

Adding to the available space is coworking’s embattled mascot, WeWork, exiting and restructuring leases as it navigates bankruptcy. The struggling operator is facing steep membership losses in the process, going from $89M in membership revenue to $83M from January to February 2024. 

WeWork’s fed-up tenants are looking for other options, leaving rivals like Switchyards, Industrious, HQ and Regus to swoop in and gain steam. Each of those brands opened more locations in Q1, Coworking Cafe reports, with Regus boosting its space by 17%.

While some of the tax-deferred “goodies” offered by Opportunity Zone investments have long expired, the interest in these vehicles has not. According to a report by Novogradac, Qualified Opportunity Funds (QOFs) tracked by the company raised $3.53 billion in equity during 2023. This increased the total amount of Qualified Opportunity Zone (QOZ) equity raised to $37.6 billion.

Because Novogradac’s figures don’t include private funds owned and operated by their principal investors, the actual QOZ investment is likely higher than the Novogradac total.

Novogradac reported that during Q4 2023, QOFs raised $414 million in equity, which followed strong second and third quarters. But the annual amount raised was lower than the totals of the three previous years, which surpassed $9 billion.

“At least part of the reason for the slowdown was the general state of the economy, specifically a decrease in multifamily housing construction, which ended December 2023 with the lowest annualized figure for permits since 2017,” the report noted.

QOFs are the investment vehicle used by taxpayers to defer capital gains. Novogradic obtains numbers on a rolling basis from QOFs that provide information and data from public sources, including Security and Exchange Commission filings and press releases.

Approximately 80% of known QOF investment is focused on developments that include multifamily housing. In quoting RealPage, Novogradac said the number of apartments built in QOZs tripled from 2016 through 2022, then doubled again in 2023. The RealPage data also indicated that 20% of all delivered apartments in 2023 were in a QOZ. However, Novogradac anticipated the slowdown in multifamily permits in 2023 will be felt in late 2024 or 2025.

Novogradac also reported that:

• QOFs with at least some focus on housing raised $30.93 billion, $8.10 billion of that focused solely on residential property

• QOFs with some focus on commercial investment raised $24.93 billion; $2.20 billion was raised by funds focused only on commercial activity

Multifamily investment specialist Bell Partners has closed on a fund that will give it the ability to acquire roughly $3.2B of properties across the country.

The North Carolina-based firm closed its Value-Add Fund VIII at $1.3B, above its target of $1B, it said in a press release. Investors include domestic and international entities, many of whom put money into the company’s previous funds, according to the release.

With leverage, the fund has investment capacity of about $3.2B, which will allow it to invest in “renovations, enhanced operations, and investment in transitioning neighborhoods,” according to a company statement.

The fund is targeting market-rate properties in 14 markets nationwide, including Sun Belt cities Raleigh and Charlotte, North Carolina; Atlanta; Fort Lauderdale, Orlando and Tampa, Florida; and the Texas markets of Austin and Dallas. Bell is also looking at acquisitions on the coasts in Boston, Washington, D.C., Los Angeles, San Francisco and Seattle.

Bell has already been active in the Bay Area as other investors are heading for the exits. Last year, Bell purchased Cadence Apartments, a 260-unit multifamily property in South San Francisco, for $206M.

San Francisco’s largest apartment owner, Veritas Investments, is delinquent on $1B of loans backing nearly 2,500 units. 

The fund is Bell’s ninth. The company closed on its $930M Bell Core Venture last year, which has an investment capacity of about $1.8B and focused on market-rate apartments.

Multifamily, which had seen rent growth north of 20% in many of the markets Bell is targeting, has cooled off this year. Rents have fallen in Sun Belt markets like Austin and Tampa as vacancy hit a two-year high in May.

Multifamily investment prices are down 19% over the past year after peaking in March 2020, according to Green Street.