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Knighthead, Silo launch new debt fund manager

Knighthead Capital and Silo Financial have joined forces to launch Knighthead Funding.

New York-based investment management firm Knighthead Capital Management and Stamford, Connecticut-based specialty real estate finance company Silo Financial have come together to form Knighthead Funding, which will manage the recently closed Knighthead Special Situations Real Estate Fund. The fund held its final close in August on $155 million in capital, 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, the two firms have focused on investments in the mid-Atlantic and the Northeast, but Jonathan Daniel, principal at Knighthead Funding, told PERE that the fund manager 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 at Silo and Knighthead Capital. 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 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.”