T2 Capital preps to invest $9 million in commercial real estate

Real estate financier T2 Capital Management announced the closing of its $9 million T2 Opportunity real estate fund which is focused on acquiring short-term debt and equity in U.S. commercial real estate. Wheaton, Ill.-based T2 Capital Management said the fund will survey all CRE property types, including retail, industrial, multifamily, hospitality, senior housing and self-storage. T2 Capital also will invest in senior debt, mezzanine debt, preferred equity and a combination of those loan types. T2 is known to cherry pick only the top-quality assets for investments which typically do not turn around enough capital to get the attention of larger private equity firms. “This hybrid debt and equity investment strategy along with the ability to quickly deploy capital differentiates us from conventional capital sources such as bank financing,” said John Southard, a director at T2 Capital Management. T2 Capital plans to focus on short-term investments and aims to return investors capital within three years of the fund’s closing. T2 Capital’s conservative strategy comes at a time when financial advisory firm Deloitte foresees darker clouds ahead for larger commercial real estate financings. Deloitte said in a report Thursday that modest GDP growth, still high unemployment and weakened housing demand postponed a recovery in the segment. Nearly $1.7 trillion in CRE loans will come due between 2011 and 2015. According to Deloitte, 60% of these loans are underwater, making it difficult for tenants to refinance and extend their terms. Write to: Kerri Panchuk.

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