TruAmerica frequently uses joint venture partners, but Robert Hart, the company’s founder and chief executive, said raising a fund gave TruAmerica more freedom.
“When you have a joint venture — we have 30 partners in our various joint ventures — they all have different methodologies of reporting and accounting systems and ways of working with their partners,” Hart said. “When you have a fund, it’s like having one partner; there’s one system of reporting and one methodology. It’s a more efficient vehicle, and its (easier to access) capital. You have discretion over the capital within an investment box. When you don’t have a fund, you are not working at your own discretion. All of the approvals are dependent on the partner.”
Hart said of the fund, “It’s a way to grow your assets under management and take deals down without having to search around for the money. It’s a competitive advantage.”
TruAmerica has more than $15 billion worth of assets under management, making it one of the largest landlords in the country. It focuses on workforce housing.
“We are exclusively devoted to value-add apartments, apartments that need to be upgraded through renovation and repositioning and have a specific focus on Class B and workforce housing,” Hart said. “Our customers are the blue and grey collar demographic. We feel that institutional capital, the kind of people that invest in funds like this, are the right source of capital for long-term investment in the apartment buildings.”
More than half of the fund’s equity commitments are from new investors. They include foreign and domestic insurance companies, public and private pension funds, global asset management firms and family offices.
“The fund is an evolution of our successful institutional joint venture platform, which has helped us to become a leader in the multifamily investment sector in a relatively short period of time. The workforce housing sector has continued to perform well over the past decade and demonstrated its durability even during the worst part of the pandemic. Our long-term view of this space is shared by a rapidly increasing number of investors,,” Chief Administrative Officer Mark Enfield said in a statement.
TruAmerica has been doing about $1 billion in transactions over the last few years, but this year, it did closer to $3 billion. The company is focused on growth markets in the Southwestern United States and is also active in the Southeast and recently opened an office in Texas.
Hart said the company avoids putting more than 10% to 15% into the units on top of the purchase price.
Going forward, Hart said, the company would grow geographically as it builds its presence in Texas and the Midwest, and will continue to add $1 billion a year in new assets under management.