Regions West | Seattle/Portland
Nov 7, 2007
By: Michael Fickes, Contributing Correspondent
The Schuster Group, a Seattle-based real estate development and investment firm, has launched a $100 million private real estate investment fund. Called Schuster Realty Partners, the fund will focus on the Seattle area.
Jeff H. Feinstein, vice chairman of The Schuster Group, will manage the fund, which has so far raised $20 million. According to Feinstein, the fund will pursue a value-added strategy and aim for opportunistic returns of 20 percent or more.
The fund was originally scheduled to launch in January, but the launch date moved up residential real estate bubble burst. “We’re looking ahead to an expected dampening of valuations caused by problems in the residential market,” Feinstein told CPN Online. “We don’t anticipate a recession, just a dampening of values. With that in mind, we believe the new fund will acquire its assets over the next one to three years.” Feinstein also said that the $100 million in equity would be leveraged up to between $300 million and $400 million.
A Grubb & Ellis report covering the third quarter 2007 office market adds credibility to the strategy, noting that price appreciation in Seattle’s housing market has slowed, even though prices continue for now to rise. Still, it may be a while before things cool off too much in Seattle. The Puget Sound Economic Forecaster forecasts continuing job growth in the region of two to three percent this year.
And last week, Seattle’s Post-Intelligencer reported that Vulcan Inc., the Seattle-based development firm owned by Paul Allen, was planning a mixed-use office and retail development in the South Lake Union area of Seattle. The development will span six buildings with more than 1 million square feet of space, including 75,000 square feet of first floor retail space. The Vulcan announcement continues the strong third quarter real estate development and investment activity noted by the Grubb & Ellis report.
The report also highlighted a number of notable transactions, including the acquisition of Marketplace I & II near the Pike Place Market for $83 million by a BlackRock Realty fund; the $71 million acquisition of the World Trade Center North by TIAA-CREF Asset Management’s Global Real Estate Group; and the $42 million purchase of the Nordstrom Medical Tower by FAEC Holdings, a subsidiary of Health Care Property Investors. Grubb & Ellis forecasts continued economic growth and job creation in the region, with office vacancy rate falling from its current level of 9.6 percent.
As a developer and investor, The Schuster Group has a reputation for focusing on environmentally friendly projects and transactions in both the commercial and residential sectors. The company’s first fund, for example, is developing Mosler Lofts, downtown Seattle’s first “green” condominium tower. Plans call for the tower to qualify for LEED™ Silver certifications. The firm also developed Normandy Park Towne Center, a green shopping center. Another current project is the Holmes Harbor Golf and Beach Club, which will include Built Green™ Certified homes.
By: Michael Fickes, Contributing Correspondent
The Schuster Group, a Seattle-based real estate development and investment firm, has launched a $100 million private real estate investment fund. Called Schuster Realty Partners, the fund will focus on the Seattle area. Jeff H. Feinstein, vice chairman of The Schuster Group, will manage the fund, which has so far raised $20 million. According to Feinstein, the fund will pursue a value-added strategy and aim for opportunistic returns of 20 percent or more.
The fund was originally scheduled to launch in January, but the launch date moved up residential real estate bubble burst. “We’re looking ahead to an expected dampening of valuations caused by problems in the residential market,” Feinstein told CPN Online. “We don’t anticipate a recession, just a dampening of values. With that in mind, we believe the new fund will acquire its assets over the next one to three years.” Feinstein also said that the $100 million in equity would be leveraged up to between $300 million and $400 million.
A Grubb & Ellis report covering the third quarter 2007 office market adds credibility to the strategy, noting that price appreciation in Seattle’s housing market has slowed, even though prices continue for now to rise. Still, it may be a while before things cool off too much in Seattle. The Puget Sound Economic Forecaster forecasts continuing job growth in the region of two to three percent this year.
And last week, Seattle’s Post-Intelligencer reported that Vulcan Inc., the Seattle-based development firm owned by Paul Allen, was planning a mixed-use office and retail development in the South Lake Union area of Seattle. The development will span six buildings with more than 1 million square feet of space, including 75,000 square feet of first floor retail space. The Vulcan announcement continues the strong third quarter real estate development and investment activity noted by the Grubb & Ellis report.
The report also highlighted a number of notable transactions, including the acquisition of Marketplace I & II near the Pike Place Market for $83 million by a BlackRock Realty fund; the $71 million acquisition of the World Trade Center North by TIAA-CREF Asset Management’s Global Real Estate Group; and the $42 million purchase of the Nordstrom Medical Tower by FAEC Holdings, a subsidiary of Health Care Property Investors. Grubb & Ellis forecasts continued economic growth and job creation in the region, with office vacancy rate falling from its current level of 9.6 percent.
As a developer and investor, The Schuster Group has a reputation for focusing on environmentally friendly projects and transactions in both the commercial and residential sectors. The company’s first fund, for example, is developing Mosler Lofts, downtown Seattle’s first “green” condominium tower. Plans call for the tower to qualify for LEED™ Silver certifications. The firm also developed Normandy Park Towne Center, a green shopping center. Another current project is the Holmes Harbor Golf and Beach Club, which will include Built Green™ Certified homes.
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