Hudson Realty closes on $250m for debt fund

The New York-based real estate manager's latest vehicle, which has a niche focus on middle-market debt investments, currently is about 50 percent invested.

Hudson Realty Capital has held a final close on its fifth fund, Hudson Realty Capital Fund V, which will invest in new debt originations and existing loan purchases throughout the US. The fund and its related vehicles, which held a first close of $52.3 million in January 2010, raised a total of $250 million from a mix of US and foreign pension funds and high-net-worth individuals.

Despite a difficult fundraising environment, Fund V, which closed on Friday, met its target of $200 million to $250 in commitments, largely because of the vehicle's focus on middle-market debt transactions in the $5 million to $25 million range, according to Precilla Torres, managing director at Hudson Realty. “The fund’s debt strategy fulfills a niche that is hard for investors to get,” she told PERE. “There aren’t many funds targeting that segment” of the market.

Fund V, which is targeting returns in the mid-teen to 20 percent range, currently is about 50 percent invested. New originations made on behalf of the fund include an $11.6 million construction loan for a condominium conversion in Brooklyn and a $5.65 million discounted payoff loan for a mixed-use property in Manhattan, both of which were made this summer.

Hudson Realty also has executed a number of debt purchases through Fund V, most notably a $139 million portfolio of 97 Colorado loans from the Federal Deposit Insurance Corporation (FDIC), which it acquired with a consortium of investors for $14.9 million over the summer, and a 40 percent stake in a $102 million pool of 109 commercial real estate loans, also from the FDIC, for roughly $7 million in late 2010. About 60 percent of Fund V's capital will be invested in loan originations, with the remainder allocated to debt purchases.

The fund is the fifth in Hudson Realty’s series of real estate funds focusing on value-added and opportunistic debt and equity transactions. The firm’s previous fund, Hudson Realty Capital IV, which closed in 2007, raised a total of $350 million in commitments for debt and equity investments in middle-market real estate transactions. Across its five funds, the New York-based real estate fund manager currently has approximately $2 billion in assets under management.