The joint venture will focus on housing, life sciences and other types of real estate.
CEI created the new partnership to increase its output by more than 50%. The company has already developed 6,570 units and has 5,282 more in the pipeline.
Michael Sorochinsky, CEI founder and chief executive, said the company had been doing about $1 billion a year in ground-up development, and the money from the joint venture would allow the company to do $1.5 billion a year “easily.”
“Since we’ve recently (entered the JV) with the Winter guys down in New York, that has allowed us to increase our annual production,” Sorochinsky said. The JV, he added, would also allow the company more flexibility.
“For us as developers, the biggest challenge is raising early stage capital, pursuit capital, pre-shovel ready capital,” he said. “By bringing them in, we are able to increase the flexibility of our pipeline around the country.”
Sorochinsky said the companies are looking at deals on a project-by-project basis and have already started some. The terms may vary, but it will be roughly a 50/50 partnership.
“At Winter, we seek out development partners that not only share our core values but also demonstrate a keen understanding of local market dynamics and proven ability to deliver best-in-class properties, and CEI clearly meets these criteria,” Rick Singer, president of Winter Properties, said in a statement.
The JV has already invested in multifamily development and value-add projects locally as well as in Dallas, Denver and Bayonne, N.J. CEI, founded in 2001, has regional offices in those locations as well as in Chicago.
Sorochinsky said he hopes that over the next few years, CEI will grow to have $2 billion worth of projects in the works annually.
The company develops and invests in real estate, especially multifamily properties.
When Sorochinsky founded it, CEI focused on acquisitions, purchasing its first apartment building in 2001. By 2005, it had around 70 buildings. But Sorochinsky became concerned about leverage and sold about 80% of the company’s portfolio ahead of the Great Recession, at which time, the company started buying again.
“I started getting a little nervous about leverage and thought that people were over-leveraging their portfolios with debt,” Sorochinsky said.
The company then got into single-family homes, purchasing properties to rent out. Then, in 2010, Sorochinsky said, he “saw a real nice opportunity to really get into the development game.”
The company started developing in Santa Monica and at sites in Koreatown and Glendale. After seeing its success locally, the company began working on building multifamily communities around the country and is now in 12 cities.
Roughly 85% of the company’s work is in multifamily, but it is also interested in other asset types like self-storage and life sciences. And it is purchasing existing properties in addition to its ground-up development pipeline.
“We’ve mostly been doing ground-up although recently we are starting to do some value-add and core, plus acquisitions, as well,” Sorochinsky said. “In the last 12 months or so, we are doing more and more value-add, but the bulk of the apartment buildings happens on the development side.”
The company does work both in high-end, luxury developments and affordable housing.
“There’s a general shortage of housing across all asset types. … There’s room, and there’s an opportunity to build housing at all levels,” Sorochinsky said.
