Club Deals for Real Estate Investing: Southwest Does it the Old Fashioned Way

Institutional & Family Office Investors now look to acquire commercial property through Club Deals managed by real estate pros like Southwest Property Strategies, LLC

Sep 21, 2011, 16:21 ET from Southwest Property Strategies, LLC

NEW YORK, Sept. 21, 2011 /PRNewswire/ -- As investors look to deploy capital in U.S. commercial real estate (CRE), more and more are telling their advisors that they want to do so through participation in Club Deals. Marc Makebakken, CIO of Southwest Property Strategies, a commercial real estate investment firm with offices in New York, San Diego and Phoenix, explains that a Club Deal is typically best defined as one to three investors with like objectives grouping together to acquire one or more specific properties.

The primary objective of a Club Deal to an investor is to eliminate the uncertainties typically associated with investment in a fund while enjoying the advantages of investing with an experienced investment manager. Other benefits to investors in a Club Deal include having the CRE investment manager provide a pre-identified property, with a specific plan of property operation, and, the knowledge that the one or two other investors participating in the Club Deal all share the same objectives. Finally, the Club Deal typically offers an investor substantially more transparency and control than that afforded by a fund.

Charles Cecil, CEO of Southwest, said that, "as CRE investment managers, we think that in the present economic environment it is appropriate to create an investment vehicle that provides capital preservation while still delivering a current return. We achieve this through acquisition of high credit tenant product in major U.S. core markets. As a result of our team's decades of experience as developers and owners of property throughout the U.S., we possess privileged access to such product owned by our banks, investment partners and attorneys."

Southwest brings its direct hands-on experience as owners, developers and operators of commercial real estate to the investment discipline thus providing a comprehensive and thorough approach to sourcing, selection, underwriting and management of property assets.

While Southwest is responding to the requests of European and U.S. LP investors by structuring club deals, it also has a uniquely LP friendly U.S. CRE investment vehicle, designed to deliver a current return to LP investors  and a projected net return to LP investors of 9.57%. We provide below additional information which demonstrates the unique structure of our LP vehicle and our capacity as its Manager to fulfill our investment mission.

  • Maximum Transparency: LP investors enjoy 24/7 unrestricted access to all of the operating and banking information of the Fund. This access is achieved through a secure web based portal. LP investors may also contact the third-party Administrator directly, without the necessity of first receiving permission from the Manager.
  • Investments are highly defined and restricted. The Manager has no ability to alter investment criteria as set forth in the Partnership Agreements.
  • All expenditures of LP Investor Capital, cash from Fund operations, asset dispositions and all payments to the Manager require the approval of the third-party Administrator.
  • No leverage at the property or otherwise, eliminating the risks associated with borrowing to enhance returns.
  • The Manager takes no Management Fee (1.25%) until LP investor capital has been deployed in acquisitions.
  • The Manager does not take any Performance Fee until after LP Investors have received all of their capital back and received a minimum 6% IRR. Other than the 1.25% Management Fee and the final Performance Fee, there are no other fees of any kind payable to the Manager.
  • LP Investors can expect to begin receiving cash distributions in the first year of operations.
  • LP Investors receive 3% interest on un-deployed Investor funds.

For Further Information:

Marc Makebakken

Charles Cecil

CIO & Founder


SOURCE Southwest Property Strategies, LLC