Oaktree targets multifamily, alternative assets with Veleta JV

The joint venture between the two Los Angeles-based firms - in which Oaktree also bought a minority stake in Veleta - aims to fuel a western US expansion.

Oaktree Capital Management has inked a new joint venture with Veleta Capital, taking a minority stake in the Los Angeles-based manager to expand its multifamily and alternative asset portfolio.

The duo’s new joint venture, dubbed Veleta Capital Partners, launched April 5 and will provide short-term, senior secured loans on multifamily and alternative commercial assets, including self-storage, industrial and medical office properties.

Brian Murphy, managing partner and CEO at Veleta, said the Oaktree partnership represents the first vertical in a planned series of real estate lending and investment strategies. “Short-term, value-add and opportunistic lending will always be core to Veleta Capital’s strategy, and this partnership with Oaktree is a significant step toward our goals of including more comprehensive lending and technology solutions, new verticals and strategic alliance initiatives,” Murphy said, noting his firm will now be able to tap into Oaktree’s resources, expertise and access to capital as part of the relationship.

Kaj Vazales, co-head of North America for Oaktree’s global opportunities strategy, said the new platform is specifically built for institutional standardization in what he believes is a highly fractured and underdeveloped transitional multifamily marketplace.

The joint venture has sights set on tier I and tier II sub-markets in the western US as part of its lending strategy, including Southern California, Arizona, Colorado, Nevada, Oregon, Texas, Utah and Washington atop any other opportunistic transactions cropping up on a nationwide basis. VCP is aiming for 12-to-36-month senior secured transitional loans for multifamily and alternative commercial assets of up to $20 million in those locales.

Alternative assets in sight for VCP’s strategy include flex space, medical office, mixed-use, self-storage, single-tenant retail and warehouse properties. VCP’s strategy prioritizes loans on acquisition, value-add, opportunistic, repositioning and recapitalization deals. There are no in-place debt service coverage ratio requirements, and market DSCR minimums are required at stabilization, according to Veleta’s website.

Oaktree, a Los Angeles-based alternative investment manager with $166 billion of assets under management, took a minority stake in Veleta Capital alongside the joint venture. The move parallels similar efforts from peers including Almanac Real Estate Investors’ strategic investment in Asia Capital Real Estate and similar investments by CenterSquare Investment Management in a number of smaller real estate private equity firms.

More traditional asset managers, such as AllianceBernstein, have also started taking action to deepen their commercial real estate debt capabilities beyond a minority stake as part of a broader push to diversify investor portfolios. On March 17, the $739 billion AUM Nashville-based manager acquired CarVal Investors, a credit specialist based in Minneapolis, Minnesota with $14.3 billion in AUM.