The Real Deal New York

Related to raise debt fund of up to $2B

New vehicle will focus on buying from struggling REITs

February 10, 2016 08:01AM

Stephan Ross

Stephen Ross

Related Cos. is expanding its recent push into commercial real estate debt, raising as much as $2 billion in capital for a new fund along with partner Highbridge Principal Strategies.

Related Fund Management will soon begin taking in funds for the new vehicle, which will focus on properties from real estate investment trusts that have recently seen their stock prices sag.

REIT stocks have fallen far more in value than have the assets they control. In that situation, REITs have an incentive to sell their properties and buy back stock to boost its value, the Wall Street Journal reported.

The company began moving into debt financing about two years ago, working with Highbridge, a division of J.P. Morgan Asset Management. Its real estate funds currently manage a total of $3 billion in assets.

Its push is part of a trend towards real estate financing by non-traditional lenders. As banks and insurance companies have been slow to return to the commercial real estate debt space, REITs and private equity firms such as Related have moved in to fill the breach.

Traditional bank lenders have begun to return to the market though. At the end of the the third quarter of 2015, banks and thrifts held $1.79 trillion worth of commercial real estate debt, with $380 billion in commercial real estate loans outstanding, according to Trepp. [WSJ]Ariel Stulberg

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