Diamond Realty Management (DREAM) is expanding in the US with a new debt vehicle and its first deal from that fund, PDI’s sister title PERE has learned.
DREAM, a Tokyo-based private real estate investment firm owned by Mitsubishi Corporation, closed a $60 million construction financing loan for a 300,000 square foot, mixed-use development in Brooklyn, New York in late 2017, spokeswoman Makiko Noda told PERE.
The deal will seed the firm’s first mezzanine debt fund, which DREAM plans to launch in the spring with a $100 million target, Noda said. The fund will invest $20 million - $100 million per deal and will target development projects and income-producing residential, office and logistics assets located in gateway cities.
“As Japanese investors prefer seeded funds, and debt investments have a shorter investment life compared to equity, our strategy is to launch moderately-sized, seeded funds continuously in order to provide them a series of investment opportunities,” Noda told PERE. “We think this Brooklyn investment will be well-supported by the boom in technology, advertising, media and information tenants, as well as increasing interest in Brooklyn from young people.”
In late November, DREAM launched its second equity fund, DREAM US Fund 2, with a $49 million in equity commitment from Japanese institutions, Noda said. With capital from the fund, which has a four-year lifespan, the firm is investing in three multifamily development projects in Georgia, Arizona and Virginia.
Through Fund 2 and its predecessor, which closed on $51 million, DREAM made minority investments in development projects undertaken by DREAM’s sister company, US-based real estate developer Diamond Realty Investment.
DREAM was founded in 2004 as a platform for Mitsubishi’s work in private equity real estate. DREAMs investor base includes pension funds, insurance companies and financial institutions, and the firm manages $4.4 billion, according to its website.