Maverick Real Estate Partners has closed on its fourth distressed real estate debt fund on its hard-cap of $75 million, the firm said on Thursday.
The distressed debt and private equity fund manager raised commitments from endowments, foundations, family offices, and wealth managers for its Maverick Lien Fund IV, according to a statement.
The firm launched the fund last June, as Private Debt Investor’s sister publication Real Estate Capital reported.
Maverick acquires defaulted commercial mortgages, mechanics liens, and judgments secured by real estate located in the New York City area.
David Aviram, principal and director of acquisitions at Maverick, told PDI that the fund will reap the benefits of rising interest rates and recent repricing trends in New York real estate.
“As interest rates rise, cap rates on multifamily, about 3 percent to 5 percent, or office and retail, 4 percent to 6 percent, will need to expand to provide for positive leverage in the financing of new acquisitions,” Aviram said.
“Recent buyers who did not lock in cheap rates for five to ten years will need to inject significant equity in order to successfully refinance,” he said.
The loans Maverick acquires typically contain provisions where the interest rates rise to 18-24 percent upon an event of default.
Maverick expects to take advantage of the current repricing of developments in the Big Apple due to the dearth of construction financing, Aviram added. “Private lenders who were active in financing these transitional properties may need to reconsider whether their loans are still in the money.”
The fund manager has fully invested its previous fund, Maverick Lien Fund III, after making 19 investments with total commitments of $35 million, according to the statement. That fund closed in April 2015.
To date, Maverick has closed over 50 distressed debt transactions in the New York City area with an aggregate value of over $120 million. Aviram and Ted Martell founded the firm in 2010.