Hunter Street to partner with operators on real estate, credit

Recently launched Hunter Street Partners is targeting opportunistic investments with operating partners in real estate and corporate and specialty finance.

Neal Johnson, Hunter Street’s CEO and CIO, said the new firm is “a combination of a spinout of four of us that were together at Isles Ranch, and prior to that Värde, [and] five additional folks from the Minneapolis area.”

In addition to Johnson, the Isles Ranch-Värde team, which has now been together for eight years, consists of Sean Rohland, Carol Racine and Michael Pohl. All three are managing directors at Hunter Street. Joining them are Partners Peter Hommeyer, Andrew Platt and Jason Hegrenes, as well as associate Rachael Polson and analyst Alex Ganenco.

At Isles Ranch, which invests in residential real estate, “we were seeing opportunity within other verticals, similar to areas that we focused on at Värde,” Johnson said. The partners wanted to stick to their strategy, so Johnson and his like-minded colleagues departed in order to branch out into finance as well.

“We’re seeing opportunities from operating partner relationships we spent a long time developing across the three verticals,” Johnson said. “There will be some deals that we originate directly, but typically what we’re trying to do is partner with operating partners that have a very niche asset class, industry or geographic focus, and really combine our competitive advantages.”

On the finance side, Hunter Street is interested in “complex, idiosyncratic deals, as opposed to plain vanilla corporate lending.” Partners could include restructuring professionals, specialty lenders or leasing companies — “groups that have a very niche focus, [and] as a result their strategy may not be conducive to raising a discretionary vehicle.” Johnson would not comment on Hunter Street’s own fundraising plans.

Deal structuring and economics will be “case by case, or at least relationship-by-relationship,” he said. “One way we’re trying to differentiate ourselves is being very flexible on how we structure relationships with operating partners. A lot of them will be programmatic joint ventures. Some could be what we call GP co-invest opportunities, where there’s a much larger transaction and we would really co-GP the investment with the operating partner alongside a larger capital provider, typically a fund that we’re friendly with.”

A lot of opportunity is being driven by the success of larger firms, Johnson explained, which are neglecting smaller deals as their AUM swells. “We’re trying to fill that void now,” he said.

“When people ask us what our competitive advantage is, the one thing we try and always point out is that we’ve been on both sides of the table. We all come out of very large institutional investment funds, but then we’ve also launched, scaled and monetized an independent operating partner business.”

Action Item: Contact Neal Johnson at njohnson@hunterst.com.

Photo of Neal Johnson courtesy of Hunter Street Partners