Investcorp’s US based real estate group said that its debt investment business continues to be active with its acquisition of several mezzanine loans that are collateralised by various single-asset properties and multiple-asset hotel portfolios located across the US. The combined portfolios of junior and senior mezzanine loans, valued at approximately $210 million, were sold to Investcorp for an undisclosed amount.
Investcorp said it completed these transactions using capital from its newly formed Investcorp Real Estate Credit Fund, as well as capital from the group’s first mezzanine fund. Investcorp Real Estate Credit Fund is a $1 billion vehicle funded with capital raised from Investcorp and its clients and a Gulf sovereign wealth investor, whose identity it did not disclose in a press statement. Investcorp said the credit fund was formed to acquire whole loans, mezzanine loans, and commercial mortgage-backed securities (CMBS) collateralised by what it said were well performing commercial and residential real estate assets throughout the US.
Recent debt investment details:
• Two mezzanine loans purchased from a major Wall Street investment bank. The first is secured by a portfolio of nine, full-service hotels across eight states. The second is secured by a hotel property in Houston. All the hotels operate under highly regarded national brand names.
• Four mezzanine loans purchased from a major commercial bank on two nationally-branded Times Square hotels in New York City.
Investcorp has been active in the area of originating and acquiring debt for several years. Since 2002, the group has originated or acquired approximately $600 million of debt and preferred equity. Beginning in late 2006, the group formalised its activities in this area with the launch of its Mezzanine Fund I, a $108 million fund created to originate and acquire mezzanine debt, preferred equity, and CMBS in the US.