Newport Beach-based Buchanan Street Partners Inc. has raised a $25 million joint-venture equity and mezzanine investment fund for real estate deals.
Buchanan started raising the fund, the Buchanan Fund I LLC, about nine months ago. In that time, the firm has dispersed 40% of the money in 10 investments so far. It plans to hand out the rest of its fund by year’s end.
The firm raised the money from wealthy individuals and a few institutions, said Robert Brunswick, the firm’s co-founder and chief executive. Brunswick also said the firm is raising additional capital and to take advantage of what he called the growing need for real estate investments in investors’ portfolios.
“Business is very good for us at this moment,” Brunswick said.
Buchanan is benefiting from Wall Street’s downturn as more investors look to more traditional investments, Brunswick said.
“Investors wanted more diversity,” he said.
The firm likes to invest in retail properties, office buildings, industrial projects, hotels, manufactured housing communities, self-storage complexes and multifamily apartments. So far this year, the firm has been involved in $325 million worth of transactions, Brunswick said, and expects to complete $500 million more this year.
Buchanan also advises clients on real estate transactions involving debt and equity placements. Recently completed deals include construction financing for the 519-room Hyatt Regency Grand Coast Resort in Huntington Beach and the 135-bed Ala Lani Assisted Living Facility in Maui, Hawaii.
The four founders,Brunswick, Tim Hawthorne, Chris MacDonald and Tim Ballard,left Finova Realty Capital Inc.’s Irvine office to start Buchanan Street Partners in 1999. Things weren’t so easy back then, Brunswick said.
“Investors were receiving extraordinary returns from other investments. Real estate investing was less exciting,” he said. Since his firm started, Brunswick said it generated returns on its principal investment in excess of 20%.
The firm started with five employees and now has 31 workers in three offices. Since its business is growing, the firm is looking to hire a few more finance professionals to fill out its ranks. The firm has operations in San Francisco, Los Angeles and its headquarters in Newport Center. The firm got its name from the street where three of the four founders used to work in the Bay area.
“It is because of good sentimental reasons,” Brunswick said. “We started our business careers in the Bay area with Pacific Union, which was on Buchanan Street. We have all stuck together and we went back to our roots.”
In the interest of disclosure, Business Journal publisher Richard Reisman is a Buchanan investor. n
