HW readers likely know well by now the growing capital glut looking to make a play on some side of the distressed asset market for residential mortgages; it now appears that at least one fund is widening that focus to what it expects to be a booming market for distressed CRE (commercial real estate). C. Daniel Clemente, a well-known distressed asset a real estate investor on the East Coast, said Wednesday that he had formed CDC Real Estate Opportunity Fund I, a private equity fund established to snap up distressed assets in the CRE market. Clemente said the fund has $200,000,000 in committed funds that he hopes to leverage ten-fold to $2 billion in assets. “With mortgage underwriting standards for commercial real estate tightening and capital availability becoming constrained, defaults are sure to occur upon maturity of loans closed between 2002 and 2007,” he said. Clemente said he believes that starting in 2009, asset values for CRE will be lower, underwriting standards will be more conservative and capital will not be readily available to bail out syndicators that overpaid for buildings and other projects. “Our fund intends to capitalize on the results of this ‘Perfect Storm,’ as commercial real estate begins to trade again at prices based on current net operating income instead of at prices based on unrealistic projections of future rental rates and income.”