Real Estate Debt Fund Capital Raising
For those on WSO who work for private debt funds (ex. Madison Realty Capital, Emerald Creek Capital), where does your capital come from? Mostly from Pension Funds, Insurance Companies, High Net Worth Individuals, & Family Offices? I also see that debt funds commonly use warehouse lines of credits but for those on WSO who work for depository institutions, do these products count as HVCRE loans where you need to put up larger amounts of reserves? Would that be a reason why most RE debt funds do not capital raise from banks? Is it also safe to say that most construction financing nowadays are being financed by debt/equity funds and not banks for HVCRE compliance purposes? It seems that most large scale speculative development deals in the market are being financed by the fund players and not banks. From what I am seeing in our deals, the debt funds sell off the senior piece to banks anyways at lower interest rates, retain the mezz piece and capture the difference in the interest rates. Most of the financing quotes we get for our development deals also tend to come from debt funds rather than banks. Is there no appetite for construction financing from banks nowadays?
Comments (1)
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Want to Unlock by signing in with your social account?