Sterling and American created Sterling American Property II in 1996 with a basic capital commitments of $123 million, including $24 million from the principals of Sterling and American. Because of its broad experience, Sterling American was able to identify a diverse portfolio of investments. These investments ranged from single assets to mortgage loan portfolios and varied in size, class, location and underlying investment strategy.
- SAP II and its co-investors invested a total of $663 million in 32 transactions between 1996 and 1999. These investments utilized $533 million of debt and $258 million of equity capital. SAP II contributed $135 million, of which $12 million was re-invested from internally generated funds. Co-investors contributed $123 million. SAP II was fully invested as of November 1999.
- The primary strategy of SAP II was to acquire assets which were under-performing and presented an opportunity for re-positioning, in an investment range that was too large for most local investors and â€œbelow the radar screenâ€ of larger investors. Acquisitions were typically made at a significant discount to replacement cost, with attractive capitalization rates on current income and after securing favorable financing.
- The aggregate debt to capitalization ratio was 63%.