Home improvement

Sequoia launches USD10m PE fund to acquire, reposition and sell single-family houses in California

Sequoia Real Estate Partners (Sequoia) has launched Pacific Value Opportunities Fund II (PVOF II).

The California limited partnership will facilitate investment in residential properties of one to four units that are underpriced and/or capable of being renovated or otherwise improved to substantially increase value, resulting in higher disposition prices and strong fund profits.

Sequoia’s founding and managing partners, Eric Sussman, Bruce Bartlett and Tim Gresham, will invest significant capital in PVOF II. Sequoia intends to take advantage of investment opportunities unavailable to buyers requiring debt financing on each acquisition.

Sussman expects: “all funds to be deployed into projects within 12 months of the Fund’s closing” because “there is a current supply and demand imbalance in the single-family market for turn-key, move-in ready homes.” The Fund will close its USD10 million raise by 31 January, 2013.

Bartlett noted that Sequoia will: “make judicious use of third-party debt financing for the portfolio.”

PVOF II partners will have a: “more certain exit strategy,” according to Gresham, since the Fund will: “be prohibited from making any new investments beyond the second anniversary of the limited partnership’s capitalisation.”

Sequoia’s Pacific Value Opportunities Fund I (PVOF I) has been showing remarkable gains and has begun to liquidate its mix of value-added (improved) investments in both apartments and single-family homes. Based on properties already sold or in escrow, and valuations from independent sources, PVOF I, (which was started in 2010) is on track to generate annual fund returns on equity in excess of 20%, the vast majority of which will go to its investors. Sussman, Bartlett and Gresham anticipate that 100% of all invested capital and profits from PVOF I will be distributed to investors by the end of 2013.

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