Shorenstein capitalizes on debt opportunities with ninth fund(3)

Private real estate investment firm Shorenstein Properties is targeting debt interests in prime markets in the US looking to capitalize on the “ongoing dislocation” in the credit markets. The firm's total debt holdings now total $685m.

Shorenstein Properties is continuing to target debt opportunities through its $2 billion (€1.3 billion) Shorenstein Realty Investors Nine fund. The San Francisco-based firm has purchased a $250 million mezzanine package backed by 450 Lexington Avenue in New York City and a $51.5 million mezzanine loan backed by the McCandless Towers in Santa Clara, California.

The deals were made through Shorenstein’s ninth real estate vehicle, which closed in May last year with $1.3 billion in equity commitments. The fund was subsequently upsized to $2.06 billion earlier this year, having been re-opened by Shorenstein at the end of 2007 in response to what it said were “disruptions in the debt markets that have changed the investment environment.”

Shorenstein’s latest debt deals – its ninth purchase in the last nine months – brings the firm’s total debt holdings to $685 million. Chairman and chief executive officer Douglas Shorenstein said in a statement the firm continued to see opportunities in class A assets in the US in light of “ongoing dislocation” in the credit markets.

450 Lexington Avenue, a 910,000-square-foot office building located in New York City’s Grand Central market, is almost entirely leased to tenants including Davis Polk & Wardwell, Warburg Pincus and Citigroup. McCandless Towers, located in California’s Silicon Valley, comprises two office buildings totaling 418,844 square feet with tenants such as McAfee and Amkor Technologies. The property is currently 89 percent leased.

Shorenstein’s other debt holdings in its ninth fund include part of a construction loan for the development of the Moffett Towers office property in Sunnyvale, California and mezzanine loans on the MTV Building in Santa Monica as well as two office buildings in Washington, DC and four office properties in New York.