Woodvale LLC, a private equity commercial real estate firm headquartered in Atlanta, is prepared to outlay up to $100 million through its Woodvale Opportunity Fund.
The newest fund by Woodvale is responding to market trends by focusing on the acquisition of distressed assets in the Southeast. Previous successful funds by Woodvale spurred development of the second largest movie studio in Georgia, Cinelease Studios – Three Ring, as well as the development of energy real estate assets across the United States through American Fueling Systems.
“Our newest fund is designed to take advantage of a significant disconnect in the real estate market,” said Rahim Charania, Founder and Managing Principal of Woodvale.“Our team was able to identify signs of distress in the market early on and plans to utilize the Fund’s capital to acquire assets that are operationally sound but are financially underperforming due to higher interest rates and overleverage.”
COVID-19 and other factors have put commercial real estate assets in a state of flux. The work-from-home movement coupled with changing consumer habits has dramatically affected the way people work, live and play. This in turn is impacting the underlying real estate affected, from hospitality and multifamily to office and retail.
“This paradigm shift in how we live our lives and interact with physical spaces has created a significant disruption in national and global pricing and the value of commercial real estate,” Charania added.
The fund is targeting distressed assets between $10 million and $40 million. It is primarily focused on purchasing hospitality and office assets. However, because many different asset classes recently have hit the market at significantly discounted rates – creating the kind of environment that favors the success of the fund – multifamily, industrial and retail assets could also be considered.
“We believe that commercial real estate market prices will continue to reset in the next 12 -24 months due to high interest rates and upcoming loan maturities,” said Bashir Mansour, a Senior Associate for Woodvale. “Many lenders are avoiding further exposure in real estate, reducing the availability of new debt. Our fund is designed to relieve balance sheet pressure for lenders and debt holders while providing a way out for borrowers from overwhelming commercial real estate loans.”
Over the next 12-24 months, news outlets are reporting that more than $229 billion in commercial paper will be coming due. This is a staggering number considering the fact that interest rates are the highest in over 30 years and real estate transaction volumes are down nearly 90 percent from this time last year, dramatically reducing the number of buyers in the market.
The combination of these two factors has created an opportunity for buyers that do not require financing contingencies to acquire assets at a discount from last year’s values. As all real estate is local, the Southeast presents a number of opportunities for discounted purchases that still provide a strong long-term growth trajectory.
Woodvale is focused on the Southeast, which has been experiencing rapid population and economic growth, though underlying real estate trends are impacting certain asset classes.
“We’re bullish on the future of the Southeast,” said Justin Fineberg, a Senior Associate at Woodvale.“With growing industries, an affordable cost of living and vibrant communities, the Southeast continues to attract people in significant numbers. We’re seeing population surges and major corporate relocations, all of which are creating a strong base for the future of this great region.”
The Woodvale Opportunity Fund I anticipates its first acquisitions to happen in the first quarter of 2024. The leaders of the organization are aggressive in their intent to outlay all capital in the first six months of the year.
About Woodvale
Woodvale is a leading real estate private equity firm specializing in the acquisition, development and management of commercial real estate throughout the Southeastern United States. Headquartered in Atlanta, Woodvale’s deep experience in special purpose real estate development, equity capitalization and debt restructuring creates a single source solutions provider for the needs of today’s commercial real estate market. The Woodvale team has expert knowledge on asset classes ranging from hospitality, retail and multi-family to industrial and special purpose commercial real estate. The company prioritizes investments that provide the best return for investors, while positively impacting the communities in which they’re located.
