5 Stone Green Capital – Bainbridge Real Estate Fund
United States of America
Last updated 12 May 2020, by Impactyield.
Developed countries (203) / More developed regions (202) / More developed regions (North America, Asia & Oceania) (153) / United States of America (112)
Stone Green Capital [“5SGC”] is led by Managing Principals Lewis Jones and Douglas Lawrence who have worked in tandem for 10 years on two successful green building / institutional real estate funds totaling approximately $500 million in equity. Together they have more than 45 years experience in real estate equity investment, asset management, lending, asset re-positioning/redevelopment, and new development projects across multiple property types.
5SGC believes high-performance [“green”] real estate assets have financial traits that can provide a superior risk-adjusted investment profile. 5SGC concentrates on property-level operating performance through the use of energy efficient technologies and operating procedures to achieve cash flow improvements and risk reduction attributes at the portfolio level. The Fund’s works to create higher investor returns by emphasizing superior operations, energy/water efficiency, and sustainable design.
The Fund seeks to invest in 1) multifamily rental, 2) non-discretionary retail, 3) green light industrial and other real estate-related assets in the U.S through a combination of equity/debt related investments in asset retrofit/redevelopment opportunities.
5SGC believes the Fund’s green value-add strategy can 1) generate 15-17% net returns for investors, 2) improve the portfolio's overall environmental impact, and 3) maintain a risk profile less subject to technological / functional / physical obsolescence.
5SCG believes a 100% green real estate portfolio will result in a 4%-8% greater annual net operating income advantage when compared to a non-green market portfolio. 5SCG's extensive operating and capital markets experience, coupled with our established green building expertise, will give the Fund a significant advantage when acquiring a green real estate investment portfolio that can experience (1) higher cash flows, (2) lower income volatility, (3) higher income returns, (4) greater tenant demand, (5) lower future capital expenditures, and (6) better control over fees [among other advantages] over a non-green portfolio.
5SGC expects that high-performance green real estate assets can have financial traits that are likely to provide a superior risk-adjusted portfolio investment profile. 5SGC also believes capital market trends will continue to evolve wherein the cost of debt capital for green buildings may be lower, or there may be ancillary profit opportunities such as the capture and sale of carbon credits, or the aggregation and pooling of energy savings into new revenue streams.
5SGC’s investment strategy anticipates the emergence of a two-tier market in which green buildings are likely to outperform traditional buildings; non-compliant buildings run a significant risk of accelerated physical, functional and economic obsolescence. Thus, 5SGC believes the market will reward Fund investors with higher asset and/or portfolio values upon asset or portfolio sale.
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Key performance indicators
Asset manager: 5 Stone Green Capital – Bainbridge
Product track record: Fund has 10 years of track record
Target IRR: 15%
Committed Capital: 7,500,000 USD (US Dollar)
Target return category: Risk-adjusted market-rate of return
Fund domicile: United States of America
Product status: Open - committed capital
Style/Stage: Development, Value-Added
Inception year: 2013
Vintage year: 2013
Target region: Developed countries, More developed regions, More developed regions (North America, Asia & Oceania), United States of America
Target close date: 01/08/2015
Product term: 10 year term
Assets under management: 160,000,000 USD (US Dollar)
Investment size: Min: 2,500,000; Max: 100,000,000; Avg: 16,000,000
Co-investment policy: LPs have priority, With LPs and non-LPs
Currency of investments: USD (US Dollar)
Currency for fund / product figures: USD (US Dollar)
Fund investments to date: 0
Fund investments to date exited or repaid: 0
Management fee: 1.75%
Carried interest: 20%
Hurdle rate: 8%%
GIIN Investors' Council Investment: No
Limited Partners / Investors: n.a.
Limited Partner / Investor Type: Endowments/Foundations, Family Office, Pension Funds, Other Institutional Investors
Phone number: (917) 523-2004
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5SGC has incorporated impact as a central element in of its investment and operational model in several ways:
1. Sustainability: We believe that energy efficiency, water efficiency, resource efficiency, and renewable energy production are key factors in achieving the long-term profitability and risk-mitigation of a real estate portfolio’s cash flows. Further, we believe (and the data supports) that a focus on utility efficiency provides a direct and measurable bottom-line return, as well as a clearly identifiable positive social impact. We have targeted, at the portfolio level achieving at least an Energy Star score of 75 and LEED Silver (or equivalent) certification.
2. Focus on Metro Underserved Markets and Food Deserts: Our Managing Principals have helped pioneer the use of Income Density Modeling to prove the viability of investments in typically underserved metro urban markets and food deserts. We believe that this type of analysis, refined over two decades, provides key insights into community-benefiting investments that create jobs, improve quality of life, and have demonstrable positive impacts on a host of community-level health and achievement measures.