Cerberus affiliate execs launch new real estate debt firm

Allegiant Real Estate Capital will invest in a variety of securities including various first mortgage loans and mezzanine loans.

The management of a Cerberus Capital Management affiliate has launched a new investment firm that will originate, acquire and manage real estate loans.

Allegiant Real Estate Capital on Friday announced its launch through an initial agreement with an unspecified “financial services firm” of $500 million for investing and managing commercial real estate loans. The senior leadership of FirstKey Lending, the Cerberus affiliate, transitioned to Allegiant, a move that follows FirstKey’s decision to stop originating commercial real estate loans.

Allegiant has also entered into an agreement where it will advise FirstKey on its $215 million loan portfolio. The firm’s investment strategies include performing, distressed and nonperforming first mortgage loans; mezzanine loans; B-notes; preferred equity; and commercial mortgage-backed securities.

“The formation of Allegiant is an exciting next step in the development of the scalable, multi-dimensional debt origination and investment platform we built at FirstKey over the past three years,” said Randy Reiff, Allegiant’s chief executive officer and chief investment officer. “Allegiant expects to continue its strong relationship with Cerberus by providing cost effective advisory services and investment sourcing.”

The announcement comes on the heels of new fundraising highs and high-profile and smaller funds seeing fundraising success. According to PDI sister publication Real Estate Capital, real estate debt fundraising hit $18.95 billion in the first half of 2016, a pace that, if it continues, sets the stage for this year’s total to eclipse 2013’s high of $36.65 billion.

Among the larger funds, Lone Star Funds held a final close in April for a massive $5.9 billion investment vehicle that will target both real estate debt and equity, another PDI sister publication, Private Equity Real Estate, reported. Recent fund launches include a $400 million debut fund from three former executives at EDENS real estate investment trust, which PERE also reported.