New York-based investment management firm Knighthead Capital Management and Stamford, Connecticut-based real estate finance company Silo Financial have come together to form Knighthead Funding, which will deploy the capital of the recently closed Knighthead Special Situations Real Estate Fund.
The fund has held a final close in August on $155 million, which primarily came from institutional investors. The closing brings Knighthead Capital’s assets under management to approximately $4 billion.
Knighthead Funding plans to provide “high-yield commercial loans including short-term bridge loans for acquisitions, refinancings, construction, turnaround/workout situations, note acquisitions, foreclosures and bankruptcies secured by a range of property types,” according to a statement. The fund primarily will invest in bridge loans and other special situation debt opportunities in the $2 million to $20 million range.
Historically, Silo Financial focused on investments on the East Coast, but Jonathan Daniel, principal at Knighthead Funding, told PERE that with this fund the team will be expanding its outlook to invest in other major markets, including Los Angeles, San Francisco, Chicago and major cities in Texas. Daniel said the firm expects to deploy the fund’s capital over the next 12 to 18 months.
In conjunction with the fund’s launch, Daniel, the founder of Silo, and his team have joined Knighthead Capital to run Knighthead Funding, which builds upon a history of loan participations between the principals of Knighthead Capital and Silo. Knighthead Funding combines Silo’s experience in real estate loan sourcing, origination and servicing capabilities with Knighthead’s institutional platform and credit expertise.
“The track record of Knighthead's principals and Silo prior to this formation goes back to 2005,” said Daniel. “Even though Knighthead Funding is new, the experience of working together and with the platform is built on an eight-year relationship.”