Madison Realty closes Sullivan Debt Fund

The New York-based firm has closed above target on $350.4 million.

Madison Realty Capital has closed its Sullivan Debt Fund on $350.4 million, well above its $300 million target, the firm told sister publication Private Debt Investor.

“We specifically focus on the mid-market, and that’s a real niche that we’ve established for ourselves,” firm co-founder Adam Tantleff said. “There aren’t a lot of big, institutional players in the space.”

The LP base includes sovereign wealth funds, public funds, corporate pensions, fund of funds, universities, unions and insurance companies, Tantleff said. The fund received commitments from the New York State Teachers’ Retirement System and the Texas Permanent School Fund, according to PERE Research & Analytics.

The firm’s fundraising effort may have been aided by the US regulatory environment, which has constricted many banks’ ability to execute and originate loans, firm co-founder Josh Zegen said.

“There’s almost 8000 banks out there – and a huge number have a middle market focus in terms of lending,” Zegen said. In particular, the ability of those banks to do deals with a special situations component has been complicated by the current regulatory environment. “We don’t really seeing this changing in the next couple of years.”

That has had a tangible effect on the firm’s pipeline. Zegen expects Sullivan Debt Fund, which has a reinvestment provision, to invest as much as $1 billion over the course of its fund life.

Madison Realty specialises in the origination and acquisition of loans in the US. The firm has invested in more than 160 transactions since its inception in 2004, according to its website.

Through its origination business, Madison Realty typically lends between $3 million and $50 million per investment, with a focus on multifamily, condominiums, retail office, industrial, student housing and medical offices. The firm offers 1 to 3 year terms with interest rates as low as 9 percent, according to its website.

In its loan acquisition business, the firm buys performing and non-performing commercial real estate loans between $1 million and $50 million in size, with a focus on the New York tri-state market, Boston and Washington, D.C.

On Monday, the firm also announced that it had completed $18.35 million across four separate transactions for properties throughout Brooklyn. 

“These recent transactions underscore our continued interest and strong activity throughout the Brooklyn market,” Zegen said in the release.