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BH3 Management, having invested more than $3 billion of equity and debt in commercial real estate since its inception in 2009, is expanding its horizons. The vertically integrated real estate investment manager, operator and developer just extended its services into a new area—growth private equity—with the launch of BH3 Growth Equity.
BH3 Growth Equity will provide capital to operating businesses, focusing on the real estate and construction industries. The new platform endeavors to not only pump funds into businesses but also to add value by capitalizing on BH3 Management’s in-field experience and carefully cultivated relationships. Casting a relatively wide net, BH3 Growth Equity will target opportunities involving businesses with annual revenue of more than $10 million and operations based primarily in the U.S. and Canada. Additionally, prospective beneficiaries must have substantial near-term growth prospects.
Partnership principles
BH3 Management’s new business will have a certain flexibility, offering clients the option of relying on BH3 Growth Equity to either lead or participate in non-controlling equity investments. Rob Sales, senior managing director of BH3 Growth Equity, noted in prepared remarks that the new strategy is predicated on working with management and existing ownership to execute business plans, optimize capital structures and accelerate earnings growth, thereby directly impacting BH3 Growth Equity’s investment.
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Sales, who has been part of the BH3 Management family since 2021, will lead BH3 Growth Equity as head of growth equity. The new division will also benefit from the participation of a heavy hitter in the real estate industry. Eric Edidin, executive chairman of BH3 Management and one-time advisor at the Blackstone Group, will take an active role in BH3 Growth Equity.
The timing of BH3 Growth Equity’s formation may very well be spot on. According to a 2023 investor survey conducted by investment adviser Adams Street Partners, 78 percent of respondents plan to allocate up to 20 percent of their private investments to growth equity over the next 3 to 5 years, and 74.8 percent anticipate putting as much as 20 percent of their private investments into real estate.
BH3 Growth Equity’s launch marks the continuation of a growth pattern at BH3 Management. The New York and Fort Lauderdale, Fla.-based company recently established a footprint out west with the opening of an office in Denver in November 2022.
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