Private equity firms TowerBrook Capital Partners and GI Partners have committed $1 billion in debt and equity to launch a commercial real estate-focused specialty finance company, Ladder Capital Finance. Principals of commercial real estate broker Meridian Capital Group are also backing the company.
Based in New York, Ladder will focus on opportunities in the commercial real estate financing market resulting from the current lack of liquidity, the firm said in a statement. Specifically, the firm plans to purchase, originate and manage a portfolio of fixed rate and interim floating rate commercial real estate mortgages as well as take junior interests in mortgages and mezzanine loans and commercial mortgage-backed securities.
Brian Harris, former managing director and head of global commercial real estate at UBS, will lead the effort. He will be joined by Greta Guggenheim, former director of principal transactions at Credit Suisse, as president.
Ladder’s chairman will be Alan Fish, who until September was chief executive officer of Washington Mutual, one of the US’ largest holders of payment option adjustable rate mortgages and subprime loans prior to becoming the biggest savings and loan in US history to collapse.
Ladder plans on growing the team from 11 to 25 people by the end of its full year of operation.
New York- and London-based TowerBrook primarily pursues control positions in private equity investments of large and middle market companies. The firm has approximately $5 billion under management and earlier this week closed its third fund on $2.8 billion.
GI Partners, is a Menlo Park, California- and London-based private equity firm with approximately $3.5 billion of assets under management. The firm invests in businesses or portfolios of assets that it believes are underpriced relative to their fundamental values, according to a statement.
Ladder will be the initial foray into financial services for both TowerBrook and GI Partners, based on portfolio company information on their websites.
GI Partners has previously ventured into real estate. It created Digital Realty Trust, a REIT, which it grew to 21 assets before taking it public in November 2004.
A spokesman for Ladder declined to comment.