Valeo Fund Targets $1trn in Maturing Commercial Mortgages
The private equity firm Valeo Fund is recruiting investors to go after $1trn of commercial mortgages set to mature between 2010 and 2013. The move comes as opportunities are begin to hit the entire commercial market, which has been bracing for struggles. Researchers at Cushman & Wakefield, a commercial real estate (CRE) services provider, anticipate a 30% climb in global CRE investments in 2010. According to Deutsche Bank, $370bn of the $1trn in loans will not qualify for refinancing, which will create opportunities for investors. The fund will invest in US commercial real estate assets too large for individual investors and too small for the larger financial institutions. The fund aims to generate $150m in equity, which through proper leveraging, translates to more than $300m in “buying power.” The fund will pursue assets in the $15m to $55m range secured by offices, retail and some debt instruments. “The Fund is designed for the sophisticated investor seeking to participate in the coming opportunities in U.S. commercial real estate, but who does not want to make direct investments or be part of a much larger institutional fund,” said Fred Hamm, co-founder of the firm. “We have limited the size of the fund to ensure we are focused on the longer term capital preservation, cash flow and capital appreciation goals of our investors.” Write to Jon Prior.