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Winning Initial Mandates

October 15, 2013

 

PERE News


Accord Group, the San Francisco-based private equity real estate firm, recently launched by ex-Presidio founders Jack Berquist and Desi Co, has taken on its first mandates, including a club deal involving CalSTRS and a hotel-focused commingled fund.

 

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Six months after officially forming Accord Group, former Presidio Partners founders Jack Berquist and Desi Co, along with fellow managing partner Jeff Sobczynski, have established the firm’s new advisory business, Accord Capital Partners, and secured its first clients. PERE recently spoke with Berquist and Co on the new venture.
 
Accord Capital will provide services to both fund sponsors and limited partners. On the general partner side, the firm primarily will be working with firms with more specialized investment strategies. “There’s a number of more niche strategies out there that are not well followed today by institutional capital, but we think they’ll be growing in momentum,” said Co.
 
One such strategy is for-sale single-family housing, involving traditional land and lot development, homebuilding and entity-level homebuilder financing. Accord currently is structuring a club venture on behalf of its client, IHP Capital Partners, a Newport Beach, California-based developer that recently received a $200 million commitment from the California State Teachers’ Retirement System (CalSTRS). Accord has been charged with finding one to three additional investors to form a $400 million club venture with IHP and CalSTRS in single-family housing.
 
Another new mandate for the firm is in the hospitality sector, where Co sees more opportunity than in most other property types. “Hotels tend to be a little less followed by the institutional marketplace right now,” he said. However, the sector has been gaining more attention lately because of the high correlation between the average daily rate, which represents the average rental income per paid occupied room in a given time period, and the US Consumer Price Index, he said.
 
The firm currently is acting as placement agent for a client that is raising its sixth fund and independently had amassed $250 million through both the fund and various co-investment vehicles. The client recently hired Accord to complete the targeted $300 million fundraise.  Accord declined to name the client, but PERE understands that the fund manager is Thayer Lodging Group, which announced in July that it had acquired the Ritz-Carlton San Francisco as the first investment on behalf of Thayer Fund VI.
 
Accord Capital also is advising limited partners on misalignment issues, where general partners want to hold onto assets to continue earning management fees, while limited partners want to recycle the capital into new opportunities. “We’re restructuring the compensation to the GP to incentivize them more heavily to sell assets earlier rather than hold on to them much longer,” said Berquist. “A lot of LPs, if they have a choice between getting $100 today or $105 dollars in two years, they want $100 today.”
 
Additionally, Accord operates a principal investment business and committed to its first fund, sponsored by a manager in the single-family housing sector, in July. In the near term, it plans to raise capital to invest on a deal by deal basis, rather than in a fund of funds format. For example, the firm raised $2.6 million on behalf of a vehicle called Accord Strategic Housing GP I through July. Accord is said to have raised the capital for the fund investment through this vehicle, which had a $5 million target, according to a filing with US Securities and Exchange Commission.
 
Accord is in expansion mode, its principals say, and has recruited a new senior hire, Stoney Cox, as director, with a focus on outreach to Asian and US investors. Cox, who will be based in the firm’s San Francisco office, previously worked at Macquarie Capital, the advisory and capital raising services arm of Australian financial giant Macquarie Group, out of the company’s Hong Kong office.
 
He will be the latest Macquarie alumnus to join Accord; prior to forming the new firm, Berquist and Co were managing directors at Macquarie Capital, focusing on capital raising efforts globally.  The two men also were co-founders of Presidio Partners, a private real estate capital-raising and advisory business that they sold to Macquarie in 2010.

 

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