Advalurem Group, a newly formed New York-based investment management company, is planning to raise about $100 million of equity to originate joint venture and preferred equity for middle market commercial real estate transactions. The company is seeking individual deals of $3-15 million, which translates to properties of $10-60 million. Advalurem is set to name a placement agent for the program, which could be structured as a commingled fund, a club fund or a separate account.

The company was founded by Gabriel Pozo, Jeffrey Carus and Paul Sygrove in response to inefficiency in middle market commercial real estate transactions. “This part of the market is too big for high-net-worth investors to invest on a repeat basis, but too small for institutional funds so it goes unnoticed from a capital allocation standpoint,” one market player noted.

Advalurem is a top-down investor and will look at markets that it believes are in recovery or growth. It tends to gravitate toward infill areas and will look closely at the quality of the real estate and the sponsorship. The company is the capital partner providing equity in joint venture with a property owner and will take a controlling stake in transactions. The company will invest in the multifamily, office, industrial and retail sectors and will hold properties for four to six years. It is targeting gross internal rate of return of 14-16%.

The partners have known each other for a number of years, with Pozo and Carus working together at Credit Suisse. Sygrove, most recently a senior executive at L&L Holding Company, was also the chief investment officer at Swig Equities. Carus joins from JAC Partners, a boutique investment company, and prior to that was at Credit Suisse and CW Capital while Pozo has held senior positions at Credit Suisse and Madison International Realty.

Download PDF here.