05/05/2010

Bainbridge Eyes Multi-Family Buying Spree

Bainbridge Cos., which has been on the sidelines for more than two years, plans to buy about $1 billion of multi-family properties in Florida and the Washington, D.C., area over the next year.

The Wellington, Fla., firm, which is partly backed by a wealthy Greek family, has traditionally acquired properties via joint ventures with institutional players, including Boston Capital, Fidelity Investments, Lehman Brothers and RREEF. Now it is weighing whether to continue that strategy or set up a commingled fund instead.

The company is seeking to recruit a vice president of capital markets to help determine how to proceed and to line up new partners, because some of its previous capital sources are no longer making commitments. The position will likely be based in New York, where Bainbridge would set up an office.

This will mark the first time Bainbridge has a staffer dedicated to raising equity. In the past, the function was handled by executives who also had other duties or, occasionally, by placement agents.

Bainbridge hasn't made any acquisitions since December 2007, when it bought the 711-unit Wellington in Arlington, Va., from Fairfield Residential of San Diego for $125 million, or $176,000/unit. But in 2006 and 2007, the company bought a total of $1.2 billion of properties, split about evenly between metropolitan Washington and Florida, increasing its portfolio to more than 9,000 units.

The firm targets luxury, stabilized properties, usually with at least 300 units. It resumed bidding in recent months and expects the number of offerings to increase because prices have started to rebound.

It's unclear how much equity Bainbridge would raise to support its acquisition plan. But the company traditionally has financed 50-75% of its investment costs. So $1 billion of acquisitions might require $250 million to $500 million of equity.

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