BIRMINGHAM, AL - Tough times? Not for Birmingham-based ValStone Partners L.L.C. The private equity firm had a first close last March of $130 million for its fourth and newest fund and expects to hold a final close of $45 million to $70 million next month. It already has invested $40 million from the new fund, according to senior managing director Gerald Timmis III. And while other private-equity funds have had as much luck tracking down money for new funds as President Barack Obama has had getting yes votes from Republicans, ValStone already plans a fifth, larger fund. It helps, of course, that ValStone often invests in troubled assets, for which this has become the Golden Age.
"We try to find opportunities to buy $1 for 75 cents. It is a time where there are plenty of assets for us to buy," said Timmis. He has two partners: Senior Managing Director Larry Jennings Jr. and Managing Director Eric Abel.
ValStone was formed in 1998 as TouchStone Partners. Its name was changed last year after the firm was contacted by Cincinnati-based Western & SouthernLife and told it previously had registered "Touchstone" for a family of mutual funds.
As of Sept. 30, ValStone had about $278 million under management and had completed acquisitions valued at $832 million since 1999. The company buys debt, bonds and real estate; does leverage buyouts with a focus on distressed and turnaround companies; and does asset-based lending and bridge and mezzanine financing.
As the state economy has collapsed and banks have, in Timmis' words, "red-lined" investments here, ValStone has been active in buying distressed commercial mortgages in Michigan that are collateralized by real estate.
It owns seven mortgages on multifamily properties in Michigan, including three properties involving nine buildings and 225 units in the city of Detroit. Other sites are in Mt. Clemens, Northville and Marquette. "There are opportunities for people willing to invest here," said Timmis.
Timmis said ValStone brings the properties up to code, evicts squatters and uses advertising to bring in families and upgrade the tenant mix.
Nationwide, ValStone focuses on senior housing and assisted living, two reliable growth markets given the aging baby boomer generation, and has about 40 centers in its portfolio.
"They have a strong team in place and are well regarded," said John Higgins, partner in the Detroit-based private equity firm of Huron Capital Partners L.L.C.
"Everything we're hearing from lenders and other debt investors is that there are tremendous discounts available to buyers. They're going to see a flood of opportunities the next couple of years at least," he said.
Source: crain.com