News
Walk Softly, Make Big Deals
October 28, 2010
| The General Investment & Development Cos., a quiet, 50-year-old enterprise with 400 employees made a big splash recently with its CalPERS deal. The giant California pension fund consolidated its 14,674-unit core multifamily portfolio with GID, which co-invested in the portfolio and will provide asset and property management services for the holdings valued at $2.8B. |
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| We snapped CEO Bob DeWitt with property management head Jeff Harris at their High Street office. The firm now controls $5.3B in assets nationwide. Known best as a multifamily owner/manager, GID also has some of its portfolio in flex industrial and suburban office. It invests for its own account, and being privately held and vertically integrated, it has in-house teams for property management, development, legal, tax, and other specialties. It does not provide third-party management and always has an equity stake in the properties it manages. Bob says that model gives GID a great deal of control, lower costs, and interests that are aligned with its partners. |
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| We snapped General Counsel Tim Hinkle with CFO Brian O?Herlihy, who tells us that GID also runs a hedge fund(Merestone Partners) and has separate account ventures with CalPERS, CalSTRS, OPERF, and a Fortune 100 corporate pension fund. The multifamily markets that attract GID—Boston, NYC, DC, LA, San Fran, Seattle, and Philadelphia—are 24/7 metro areas on the coasts with high barriers to entry and one million-plus population. Bob told us that with the ?bloom off the rose of ownership? and rents that have been rising since July, at the right time GID?s development group will build more in the US, especially since financing has come back for high-quality projects. For such developments, Brian says LTV can be up to 65%. |
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| While Thad Palmer (at the head of the table) and the acquisition team pursue multifamily opportunities, GID plans to explore new directions. With the CalPERS consolidation, GID will take on about 250 more people. Also, its four-year-old international group is working with partners in India to develop workforce housing for first-time buyers at Taksila Heights in Gurgaon. There, a young family can pick up a two or three-bedroom unit with 2,200 SF for $100k. So far, the 500-unit project is 83% pre-sold. The group also is looking at Brazil for possible future development projects, perhaps residential or logistics. But wherever it goes next, GID will stick with the approach that has worked so far: use its own capital to establish a track record then access institutional capital. |
