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Thursday, 05 April 2018

Alpha Wave Aims for Small-Cap Apartments, Hotels

When Ken Cruse left Sunstone Hotel Investors Inc. three years ago to form Alpha Wave Investors, he realized it would be a tough grind to pursue apartment properties and hotels, particularly because many institutional investors also had their eyes on the sectors. So the company aimed small. It's found success pursuing properties with 100 units or less in select Western markets.

Commercial Real Estate Direct Staff Report

When Ken Cruse left Sunstone Hotel Investors Inc. three years ago to form Alpha Wave Investors, he realized it would be a tough grind to pursue apartment properties and hotels, particularly because many institutional investors also had their eyes on the sectors.

So he and his partners, Jordan Fisher, a West Point graduate who previously had founded a web development company, and David Sloan, formerly general counsel of Sunstone, decided to aim small, figuring it would find fewer competitors.

Alpha Wave found that the small-capitalization market is highly fragmented - most small properties are owned by mom-and-pop investors - and sometimes properties are held by what Cruse, who previously was Sunstone's chief executive, called "inadvertent" owners. That could happen if, say, a property's owner dies and leaves his real estate holdings to his children, who might not have any interest in the business. As a result, many of the opportunities it finds have been undermanaged or might be "broken" in one way or another. They typically are in need of renovations or other upgrades and often have substantial vacancies.

For instance, it recently purchased Orange Tree Village, a 110-unit apartment property in...


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