Investors are increasingly recognizing the benefits of investing with small, emerging, and diverse Real Estate managers. Since 2011, Enterstate’s team developed an expertise in obtaining funding for, and advising to, emerging managers.

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We continually seek to connect with emerging managers interested in scaling their investment platforms. Our emphasis above all is on the principals’ reputation.

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Challenges Faced by Emerging Managers:

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Emerging managers are often highly skilled, driven, and success-oriented individuals. They typically gain access to attractive deals and are motivated to see through their successful implementation.

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Nonetheless, they often face multiple challenges, including: (a) difficulty to attract capital due to the lack of investment history; (b) insufficient Net Worth to meet the debt application requirements; (c) insufficient capital to invest the required GP contribution; and (d) challenges “landing” the deal due to inability to provide seller with assurance of closing.

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Emerging Managers Solutions:

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Over the years, we have found that emerging managers benefit from the following:

 

• Co-Sponsorship with Established Sponsors: Enterstate regularly facilitates introductions between emerging managers and established sponsors. These arrangements allow the emerging sponsor to benefit from the established sponsor’s track record, strong operations, and ability to meet the loan requirements. Likewise, the established sponsor benefits from access to additional deal-flow, as well as the ability to collaborate with motivated and highly-experienced individuals

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• Co-GP Investment Structures: Emerging managers can often mitigate some of the challenges outlined above by raising capital from investors who specialize in providing Co-GP capital on a deal-by-deal basis. Please refer to the “Co-GP Equity” page for additional information

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• Seed / Anchor Partnerships: Seed and anchor partnerships allow the emerging manager to access capital on a broader, strategic investment arrangement. Investors in this category typically target high-quality emerging managers, and seek to benefit from the long-term economic benefits of such strategic partnerships. Investment structures vary and can include the formation of a newly-established entity to pursue portfolio investments, fund anchor investments, and programmatic co-GP partnerships