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A group of local people have teamed up with an investment firm located near the Twin Cities to form an investment fund. The aim is to pursue real estate contracts for the Fund related to:
• Buildings in downtown Grand Marais that could be invested to for higher and better use – specifically supporting more retail, office needs and entrepreneurs.
• Land development projects to support housing and commercial needs for the entire Cook County area.
So, who is involved and what is the process? Supplying those answers was Howard Hedstrom, Ann Posis, and Lori Bonin, president of REVocity. The three agreed to a Zoom meeting last Thursday, January 21, to explain more about the possibilities and plans for the future.
Who is REVocity?
Located in Northfield, Minnesota, REVocity is a business with the Rebound Partners organization. Bonin, 30-plus years in properties, operations and finance leadership roles, said her group started in May 2020.
REVocity mission statement reads, “REVocity exists to support the elevation of towns and cities by securing, enhancing, and managing impactful real estate investments. We embrace these opportunities guided by a clear intention that expresses our core commitment around providing sustained community growth with balanced financial returns.”
The company’s investment philosophy spells out its mission. “The local community drives investment decisions. Our approach is to focus on a diversified portfolio of impactful projects. The fund model supports using local banks, developers, construction firms, and other area businesses to assist in the bigger picture of stimulating local economies.”
When partners are found, the ownership structure is formed between REVociry, general partners and limited partners. This partnership optimizes both the expertise of REVocity and the local leadership. Bonin said it’s important to have at least one person on board who is used to working to secure grant proposals.
Once capital is pooled and leveraged, community minded real-estate projects are sought that can deliver meaningful financial returns to the investors in the future.
Howard Hedstrom said the goal in Cook County is to help alleviate some of the pressure on housing, strengthen the tax base, promote employment and stimulate business across the county. “It’s exciting,” he added.
Besides Cook County, REVocity is working with investment groups in Decorah, Iowa; Fairbault, Grand Rapids, Owatonna, Red Wing, Northfield, Hastings, Spring Grove, Waseca, Winona, and Rochester. But that’s just a start. Bonin said they want to have 1,000 community funds in the next ten years. “We started in Minnesota and want to grow throughout the Midwest.”
What’s happening in Grand Rapids might give folks here an insight to how this partnership works. The first purchase by REVocity and the Grand Rapids Community Real Estate Fund was a commercial retail business filled with three growing businesses. Next, the group purchased an apartment complex that will provide student housing for the local community college. And finally, the third project in the works has the Fund developing an 82-room hotel, filling a need for hotel rooms in Grand Rapids.
For its part, the Cook County Real Estate Group will find buildings and land, and if it looks like a deal can be made, REVocity will manage the oversight and governance of the Fund investment properties.
When asked how the partnership formed, Howard explained that after the fire that burned three downtown businesses two years ago, a group was formed to look at ways to rebuild on the burned-out lots. From those meetings and explorations into financing new projects, talking to developers and builders, eventually, said Howard, they connected with Rebound. And when they learned that Rebound couldn’t help but REVocity maybe could, talks began.
Who is in the Cook County Real Estate Group?
Start with Howard Hedstrom, former president of Hedstrom Lumber Company; Ann Posis, WTIP Community Radio, Program Director; Gary Latz, A2B Fulfillment-VP of strategic affairs; Jeff Latz, former owner of Clearview General Store in Lutsen; Roger Opp, former bankers CoBank ACB; and Steve Surbaugh, Cascade Vacation Rentals, owner. In addition, on Thursday, January 20, Tim and Beth Kennedy announced they were joining as general partners.
How is the operation structured?
REVocity owns 51 percent of the joint venture, while the Cook County Real Estate Group owns 49 percent. Over the next few months, the general partners would look to add limited partners to the group.
Generally, the partnership between REVocity and local real estate fund groups lasts seven years, said Bonin, but that depends on the real estate market at the time. “We can extend the contract if it makes sense to do so,” she said. “We want to sell the property at the right time, so the investors get good returns.”
When asked what drew her to joining, Ann Posis replied, “For a long time I have been looking to make more of an impact on the community. This pooling of funds, pooling of resources, pooling ideas, this seemed like the best way for me to contribute.”
Posis emphasized that this investment group was looking for projects county wide, not just in the city of Grand Marais and that the number one need in the county was to make more affordable housing.
The group is currently looking at several potential projects, one involving a building and one a land purchase. But both of those are in “the very early stages of due diligence,” said Bonin.
“The general partners are confident that Cook County is well-positioned for real estate investment,” said Hedstrom. “We believe that people will continue to visit in high numbers and that the trend for city-dwellers to relocate will also continue. Our goal is to create a variety of housing opportunities for those who live and work here and to make the most of our existing real estate resources, thus contributing to business development and growth in our community.”
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