Hilco Launches Distressed REO Venture
The firm has partnered with Real Estate Principal Solutions to launch a fund targeting distressed residential properties.
June 30, 2008
A lingering unknown as the real estate bubble continues it’s dissolution is what the lenders will do with all of the bankrupt properties and unsold developer assets? Hilco Real Estate LLC and Real Estate Principal Solutions, both based in Chicago, aim to answer that question, launching a new fund, Hilco Residential Partners LLC that will be focused exclusively on buying these kinds of properties.
“Our goal is to provide immediate balance-sheet relief for lenders and eliminate their further involvement with the costs of real estate ownership," Navin Nagrani, a vice president at Hilco Real Estate, described in a statement. He added that the firm’s nationwide reach and infrastructure will allow the investors to “monetize acquired assets more quickly and with less cost” translating into greater proceeds for distressed portfolios.
The size of the new fund, which will also be based in Chicago, was not disclosed.
The vehicle will invest in three classes of distressed real estate, including single- and multi-family focused real estate-owned portfolios or REOs (which are controlled by the banks); closeout units in a residential development; and non-performing notes on single- or multi-family properties, including projects that are more than 90% completed.
The news follows similar efforts from investors to fill a hole in the decimated real estate market. Last week, for instance, Invesco created a real estate investment trust, Invesco Agency Securities, that will target agency mortgage-backed securities, according to The American Banker. Also TIAA-CREF Asset Management launched a closed-end fund in April, TIAA-CREF US Real Estate Fund I LP, that will invest directly in industrial, office, and multi-family properties.
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