Investcorp RE launches $1bn US debt fund

The real estate division of Bahrain-founded Investcorp has started to invest its latest US debt vehicle by acquiring $210m of junior and mezzanine loans.

The US real estate division of Bahrain-founded investment firm Investcorp has launched a $1 billion (€648 million) debt fund.

The firm said it had completed six deals for the fund, Investcorp Real Estate Credit Fund, valued at $210 million. In a statement, the firm said the transactions involves junior and senior mezzanine loans secured against single asset properties and hotel portfolios across the country.

Investcorp did not disclose any financial details, but said reveal two mezzanine loans were acquired from a major Wall Street bank secured by a portfolio of nine hotels in eight states, while a second loan was backed by a hotel in Houston. In addition, it has acquired four loans from a major commercial banks secured against hotels in New York’s Times Square.

US private equity real estate firms have been racing to establish debt funds in a bid to bolster their equity investments, particularly as banks sell real estate-backed loans at discounted rates.

Investcorp’s real estate division has been investing in real estate debt in tandem with equity investing since 2002. In 2006, the firm launched Mezzanine Fund I, which attracted $108 million of capital. This fund was established with New York-based TriLyn and the Bank of Scotland.