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Savanna acquires $120m in NY property debt

The New York-based private equity real estate firm says there are ‘literally hundreds’ of discount debt deals to pursue in the current economic climate.

New York-based Savanna Investment Management is taking advantage of the credit crunch in acquiring $120 million (€78.8 million) in debt tied to seven commercial and residential properties in Manhattan, Long Island and Connecticut.

The firm announced the loan purchases, from four Wall Street banks, were made through the firm’s $313 million Savanna Real Estate Fund I at discounts of up to 30 percent.

“While there are literally hundreds of potential debt deals to pursue in this climate, we have carefully picked a handful of notes secured by the kind of real estate we typically buy, own and operate,” said managing partner Nick Bienstock in a statement.

The firm closed its first real estate fund in January with plans to acquire an estimate $1 billion of office, residential, retail, land and development opportunities focusing on US states in the Northeast corridor and mid-Atlantic regions.

Bienstock, a former vice president at Sam Zell’s real estate finance company Capital Trust, added: “Our objective with these types of investments is to generate equity-like return with substantially less risk. Our experience as a development company gives us the security of recognizing the true value of these assets.”

The fund has already invested in a 100,000-square-foot residential, rental and retail building opposite Manhattan’s Madison Square Garden arena, at 31st St and 8th Ave, and two development sites adjacent to transportation hubs. Previous investments for the firm, which was founded in 1992, include the 2005 acquisition of 141 Fifth Avenue, a twelve-story Manhattan loft building purchased in partnership with The City Investment Fund – a joint venture between Morgan Stanley and Fisher Brothers – and SL Green Realty Corp.