Origin Investments launches USD350m multifamily credit fund
Origin Investments, a private real estate manager, has launched a USD350-million Multifamily Credit Fund designed to give qualified purchasers a passive income stream substantially higher than most other fixed income investments such as ETFs, corporate bonds and certificates of deposit.
The Fund’s low-risk passive income stream comes from conservatively leveraged Freddie Mac K-Deal and SBL B-Piece certificates backed by cash flowing and geographically diversified multifamily mortgage loans. The Fund targets a total net annual IRR of 8-10 per cent and a 6-8 per cent net annual yield.
Additionally, the Fund is structured with a REIT subsidiary, which under provisions of the Tax Cuts and Jobs Act provides a 20 per cent tax deduction on all taxable dividends, regardless of an investor’s income. The REIT structure also blocks Unrelated Business Taxable Income (UBTI) for tax-exempt investors, including IRAs.
“Origin’s Multifamily Credit Fund underscores our firm’s ability to conceptualise, build and deliver an expanding range of sophisticated investment opportunities and strategies to meet investors’ goals and objectives,” says Origin Co-CEO David Scherer.
The new Multifamily Credit Fund, the first of its kind for Origin, comes less than 90 days after the firm closed its first Qualified Opportunity Zone Fund. With USD265 million raised, the Origin QOZ Fund ranks in the top two percent of the largest opportunity zone funds to date.
Based on its various investment and performance-related accomplishments, Origin has met Freddie Mac’s stringent requirements to become an approved B-Piece purchaser. Freddie Mac’s requirements include:
A proven high level of operational expertise gained by owning and investing millions of dollars of multifamily assets.
A thorough understanding, through active participation, of the inner workings of Freddie Mac.
A significant capital base. The equity required to buy B-Piece certificates is between USD25 and USD65 million.
A demonstrated track record of being long-term partners rather than looking to buy and resell quickly on a secondary market.