New York Equity Group has closed its first real estate investment fund with $25 million in capital commitments led by family office Christmann & Gutermann, Commercial Observer has learned.
NYEG, a recently formed venture led by real estate investor Philip Michael, intends to use proceeds from the fund—known as NYEG Fund I—to pursue its strategy of primarily investing in multifamily properties in secondary markets like Philadelphia, New Jersey and Baltimore, Michael told Commercial Observer.
The firm expects to soon break ground on a 21-unit student housing development located near Temple University in Philadelphia that will look to cater to the area’s significant college student population.
NYEG also recently acquired a minority stake in a 78-unit multifamily development in the city of Aalborg, in Michael’s native Denmark. The property, which is entirely leased to the Danish government, serves as government-subsidized housing under the country’s guaranteed housing laws.
“In Denmark, they have a strong policy against homelessness; everyone is entitled to a home,” Michael told CO. “The government takes out a lease on the property and then they sublease it to whoever needs it. For the property owner, it’s a really strong deal—there’s no management and no [tenant] turnover involved. It’s almost like a bond.”
Michael, who worked as a director at commercial real estate news and events company Bisnow Media before venturing into real estate investment full-time, said the off-campus student housing project in Philadelphia will “be marketed toward students and postgrads” in that city’s bustling university scene.
“There’s so much growth potential down by Temple,” he said. “You can see high-rises and new development [being built], but also the remnants of what used to be a really bad neighborhood.” Michael added that NYEG is “also looking at other sites in Philly” for similar multifamily projects.
The Christmann & Gutermann family office provided the majority of the $25 million comprising NYEG’s first fund, which Michael said is mostly financed by European investors—including Danish soccer player Martin Braithwaite, a relative of Michael’s.
The New York- and Switzerland-based family office is backed by the Gutermann family’s textile industry fortune and currently has $6 billion in assets under management. Around $2 billion of that investment is focused on real estate, according to Steven Christmann, who leads the family office.
Christmann told CO he was drawn to NYEG’s focus on “second-tier markets with high growth rates,” noting that the fund’s approach falls in line with “the typical family office investment strategy [of] wealth preservation” while avoiding the “high barrier for entry” in primary markets like New York.
“I’ve been hearing for years now about the student housing market in Philadelphia and I know people who’ve made money there,” Christmann said. “We’re looking at emerging markets. We’ve been active in Denver and New Orleans, and we’re looking at Philadelphia and Baltimore.”