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Perseus to target distressed developers

The Washington-based private equity real estate firm has launched a debt financing vehicle to provide up to $1bn to struggling development projects in the US. It will focus on property developments with a total capitalization of between $20m and $75m.

Perseus Realty Partners is targeting distressed developers in the US after launching a real estate debt financing vehicle, PRP Participating Loan Program.

PRP PLP will concentrate on property developments with a total capitalization of between $20 million and $75 million (€12.6 million and €44.1 million), according to the Washington-based private equity real estate firm. In total, the fund will provide up to $1 billion in financing for the development, redevelopment and acquisition of office, retail, industrial and multifamily properties.

In June, Perseus president Paul Dougherty told PERE fund managers targeting distressed debt in private equity real estate faced diminishing opportunities, with too much capital chasing too few investments. “I don’t see that much distress out there,” he said, arguing that the distress being experienced was among sellers, not assets. “Most properties are in relatively strong institutional hands that won’t fire sale unless they absolutely have to.”

However in a statement today, Dougherty said that the continuing credit market dislocation was preventing many developers from completing projects owing to a lack of financing. “There currently are numerous, well-conceived development and redevelopment projects in strong markets that could be moving forward successfully, except that developers and operators don’t have sufficient liquidity to proceed,” he said.

The PLP vehicle – which will focus on senior debt – will invest over the next 18 to 24 months, he added, with up to 95 percent loan-to-cost financing available.