Property debt investors raising money but still looking for distress

With banks hesitant, companies amass dry powder for real estate plays

Blackstone's Jonathan Gray, Madison Realty Capital's Josh Zegen (Getty; Madison; iStock)
Blackstone's Jonathan Gray, Madison Realty Capital's Josh Zegen (Getty; Madison; iStock)

For a few months, real estate debt investors have been raising money and looking for opportunities to spend it.

Now it seems things are coming to a boiling point as competition grows to put that cash to work. Borrowers are getting desperate as loan extensions start to expire on malls, hotels and offices, according to Bloomberg.

“So much money has been raised and most was raised for distressed returns but there hasn’t been much distress,” Dave Karson, vice chairman at brokerage Cushman & Wakefield, told the publication. “It gets expensive to not invest money that you’ve raised.”

While banks and other major lenders remain cautious, Blackstone, one of the world’s largest real estate investors, closed an $8 billion property-debt fund in September.

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The debt fund is looking for opportunities created by Covid-driven market dislocation, Jonathan Pollack, global head of Blackstone’s real estate debt strategies, told Bloomberg.

Madison Realty Capital, which has raised more than $900 million since March, recently closed a $173 million construction loan for a rental building at 214 West 28th Street.

[Bloomberg] — Sasha Jones

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