Ramius, the investment management arm of financial services firm Cowen Group, and private real estate company Feil Organization have launched RCG Longview Debt Fund V, a $500 million fund, with which they will seek to capitalise on dislocations in the real estate lending market. The vehicle officially was launched last month, but has not yet held a first close, according to a filing with the US Securities and Exchange Commission.
Fund V will reflect a continuation of the investment strategy of the partners for their four predecessor funds. It will be invested in whole loans, bridge first mortgages, B-notes, participations, mezzanine loans, preferred equity, mortgage purchase financings and senior loans secured by existing mortgages. The firms typically will originate loans to borrowers who are involved in an acquisition or loan refinancing; discounted payoff of an existing loan; debt restructuring; note financing or recapitalization/partner buyout. The vehicle will not be invested in CMBS or other complex public securities.
The fund seeks to generate “equity-like returns while only taking debt-level risk,” Steven Novick, partner and chief operating officer at Courtland Partners, the real estate consultant for the Pennsylvania Public School Employees’ Retirement System (PSERS), wrote in a memorandum to the pension plan’s board. Fund V seeks to distribute a current return of 8 percent and generate net leveraged returns of 12.5 to 14.5 percent, according to PSERS documents.
The pension system committed $75 million to the fund late last month, representing its second investment in the RCG Longview Debt Fund series. Its first commitment, in the amount of $175 million, was approved in 2008 for Fund IV. That vehicle raised $600 million and currently has a net internal rate of return of 7.2 percent. PSERS also committed $125 million in 2006 to the RCG Longview Equity Fund series.
Ramius – which invests in real estate, hedge funds and fund of funds on behalf of Cowen – and Feil launched the RCG Longview lending platform in 1999, along with mortgage brokerage firm Estreich & Company, which sources many of the funds’ transactions. The sponsors collectively own or manage more than 22 million square feet of real estate and approximately 27,000 residential units.