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More and more investors are looking for opportunities at discounted prices.
SL Green Realty plans to begin financing a $1 billion opportunity bond vehicle targeting New York City this month, according to a quarterly earnings report.
The firm joins a number of other investors looking to take advantage of distressed and troubled assets expected to hit the U.S. market over the next year. Many of these properties and notes have sound fundamentals, with the exception of the office asset class, but the debt is underwater and the owners lack the wherewithal and desire to deploy more capital to refinance. there is no.
Another recent example is billion dollar fund RXR and Ares Management reportedly formed to buy distressed office assets in New York City. Both companies have invested $500 million and plan to raise the rest. They only plan to invest in assets that are still competitive but require new capital for renovations or debt restructuring. RXR CEO Scott Rechler described the category to the Financial Times as “the mid-Class A portion of the market.”
Additionally, commercial real estate leaders Ethan Penner and Chad Carpenter are launching Leven Office REIT. The newly formed company aims to raise $1 billion through a blind pool IPO with lead investors to provide first lien, mezzanine debt and preferred stock financing to office owners and investors. The company will also invest in distressed office debt and real estate.
SL Green believes it can launch the fund by the first half of this year.
“We’ve been talking to people domestically, in the Middle East and in Asia,” SL Green CEO Mark Holliday said at a conference in December, according to the report. Bloomberg. “We estimate it at about $1 billion, but that doesn’t mean that’s the dimension of opportunity. That’s exactly where we want to anchor our first fund.”
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