Oaktree Capital Management has created a lending platform targeting residential developers as it seeks to take advantage of the lack of credit for homebuilders in the US.
The Los Angeles-based private equity and real estate firm has formed Sentinel Capital Funding in partnership with Eugene Rosenfeld and Craig Manchester, the principals of residential developer and investment firm Integral Communities. No financial details were disclosed.
In a statement, Manchester said conventional financing for residential land development and homebuilding had “come to a standstill”, adding Sentinel aimed to fill that “void in the market”.
The company will target West coast developers and be led by Bruce Beck, a residential construction lender who began his career at Bank of America, according to the statement.
Construction lending has been severely hit in the wake of the credit crisis, with many banks retreating wholesale from the sector because of falling values in the residential property sector and fears over defaults.
Data provider Foresight Analytics said total delinquencies for US construction loans hit an estimated 18.2 percent as of the end of the third quarter, an increase from 16.3 percent in the three months to the end of the second quarter. Final figures are due at the end of the month, but marks a dramatic rise from the lows of 2.3 percent seen in the second quarter of 2007.
Foresight said “worsening fundamentals and reduced liquidity in the commercial real estate sector will likely contribute to further rises in the delinquency rate”.