Middle Street Partners has completed a $69 million recapitalization with Inceptiv Management, a private equity firm based in Culver City, California, and a partnership of high-net-worth individuals operating as Cannery Woods.
The funding gives the Charleston, South Carolina-based multifamily investment and development firm the financial backing it needs to target $1 billion of early-cycle developments and acquisitions over the next two to three years.
“It's positioning us to play offense in this new cycle,” Middle Street Co-Founder Ryan Knapp told Multifamily Dive.
The capital also allows Middle Street to recapitalize general partnership investments across the firm’s existing portfolio of assets and buy out its previous minority general partnership owner. Knapp said his limited partners on development and acquisitions require Middle Street to contribute 5% to 10% of the equity in a deal. With the additional $69 million in capital, the firm can be more active.
“There's a force multiplier effect,” Knapp said. “If for every dollar of GP capital that we have, we're able to raise 10x to 20x, that’s how less than $100 million can translate to $1 billion or $2 billion of total capitalization.”
While many owners and developers are now recapitalizing problem assets or portfolios, Knapp said that Middle Street isn't dealing with distress in its portfolio. “To the extent that we recapitalized the GP position in certain assets, it was really just about putting liquidity on the balance sheet that really frees up that capital to do more stuff,” he said.
Eyeing a market opportunity
Greystar alums Adam Monroe and Knapp founded Middle Street Partners in 2009. Since then, the firm has sponsored more than $2 billion in multifamily acquisitions and development, primarily in Georgia, Tennessee, Florida, North Carolina, South Carolina and Texas.
As prices reached frothy levels in 2021, Middle Street sold 10,000 units. “It really felt so expensive,” Knapp told Multifamily Dive.
Four years later, with new deliveries beginning to fall in 2025, Knapp thinks now is the time to start building and buying again.
“I think we're going to have a really good run here again,” Knapp said. “Real estate is famously cyclical, and you need these down cycles in order to get it right. We were disciplined during the peak, and now we're excited.”
Knapp said Middle Street will be open-minded as it approaches acquisition opportunities and careful to avoid limiting itself by eliminating certain product types or markets.
“I think we are very good at finding value and doing rehabs and things like that,” Knapp said. “But we're not boxed into that. We're not going to box ourselves into a specific vintage.”
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