Advalurem Group, a New York-based investment management company that provides equity for middle market deals, is hoping to substantially expand its portfolio in the coming months. Since its inception almost three years ago, the firm has acquired ownership stakes in a portfolio comprising about one million square feet of space and about 1,000 apartment units. “Our goal is to double our portfolio over the next 12 months,” said Gabriel Pozo, founder.
Advalurem seeks institutional-quality deals where it can invest $3-15 million on either an equity or preferred equity basis. The firm also provides sponsor equity and co-investment equity and would consider a mezzanine transaction with the right structure. “While we have yet to do a debt deal, we might take on a high-yield debt position on a property in a major market,” Pozo said. Its equity investments translate into a property value of $10-60 million.
As a top-down investor, Advalurem can invest in a diverse array of geographic locations. “We look for an overall macro story and good drivers as well as some sort of discount [to intrinsic value],” said Fred Scott, principal. Scott pointed to the firm’s recent acquisition of 1000 Floral Vale, a 90,000-square-foot office building in Yardley, Pa. The company and its partner, Pembroke Hobson, obtained a $13.65 million loan for the roughly $20.6 million acquisition. “Advalurem provided joint venture equity with preferential rights, as well as provided a portion of the sponsor equity for this transaction,” Pozo added.
The Class A property, which is about 80% occupied, is close to Philadelphia and Princeton, N.J., and is in the center of a healthcare/pharmaceutical corridor. “We’re making an indirect play on the healthcare, pharmaceutical and life sciences industries,” Scott said. Its location also fits in well with the big picture of what Advalurem is looking for—a strong asset in a solid secondary market. “What I find interesting is that there is still a dearth of capital for suburban office properties and properties in secondary markets,” Pozo said.