LOS ANGELES–(BUSINESS WIRE)–Pinnacle Investments, a private equity real estate investment fund launched in early 2019 in Los Angeles, had a very active and successful first year of operations. Pinnacle’s focus is the acquisition of value add commercial real estate opportunities with demonstrated historical cash flows. Current acquisitions are predicated on proven demand. Pinnacle’s portfolio consists of various commercial real estate holdings, with a primary focus on manufactured housing communities and self-storage facilities. With this specialized market focus, Pinnacle announced a special distribution above the preferred return for their investors.
Matthew Udell, principal and managing director at Pinnacle Investments, explains “how pleased we are with our first full year of operations and the fund’s strategy.” He illustrates an example of one of their holdings: “In 2019, we acquired a manufactured home community comprising an entire city block in El Paso, Texas.” The opportunity was unique because maintenance fell on the city. Matthew says, “It fit the box of what we are looking for: 1. cash flow, 2. proven demand behind its occupancy, and what appears as a recession-resistant property. It’s exactly the type of asset Pinnacle buys.”
“We immediately raised asking rents to market, invested in manufactured home inventory to fill the vacancy and reduced the operating expenses through active professional management,” Udell explains. “The result was excellent for our investors; the cap rate moved from a 7.5% to 10%, a significant boost of cash on cash yield.” When asked exactly what that return amounts to, Mr. Udell is specific: “Pinnacle refinanced the senior debt on the property. Refinance proceeds alone will allow Pinnacle to return almost all initial investor equity. Post refinance, the property will continue to generate a healthy cash flow to investors. The improved operations have resulted in project level year 1 levered cash on cash yield in excess of 24%.”
With the commercial real estate cycle in its late stages, the fund is poised to exceed expectations through its current holdings of recession-resistant assets, with strong fundamentals in demand. Pinnacle’s accredited investors enjoy consistent income, real estate ownership and a share of the profits from the Fund’s diversified portfolio of commercial real estate. The management team’s comprehensive skill sets paired with unique and well-executed investment strategies distinguish Pinnacle Investments from other real estate investment firms.