SKW Funding, Bain Capital in $1.3B JV for troubled debt

SKW Funding and Bain Capital Credit have formed their second joint venture, targeting $1.3 billion in troubled real estate debt.

The new entity was part of the lender consortium behind a $410 million debt package for Nightingale Properties and Wafra Capital Partners to redevelop the former Citibank building at 111 Wall Street. The size of the loan package was initially reported as about $500 million, but the joint venture confirmed the lesser figure with The Real Deal.

SKW and Bain Capital provided mezzanine financing as part of the capital stack, but would not disclose how much.

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The 111 Wall Street loan was an example of a role the joint venture can play in the pandemic-driven downturn affecting certain real estate sectors, said Bain Capital’s David DesPrez.

“In the debt capital markets, we are seeing fewer lender participants for office than when we were pre-Covid,” he said. “We are, in a number of cases, filling the void of those folks.”

The joint venture’s main focus will be sub- and nonperforming loan acquisitions and originations of special-situation loans in the greater New York City market, but it will also seek opportunities nationally. The venture recently acquired a $42 million note secured by an office portfolio in Austin, Texas.

In July 2019, SKW — which was founded in 2014 by the Wrublin family’s Dalan Management and HKS Advisors partners Ayush Kapahi and Jerry Swartz — and Bain Capital teamed up for a venture that resulted in nine deals. Its target was $500 million.