Urbanite Capital is raising its second real estate debt fund with no performance or management fees, according to a source familiar with the situation.

CE-GH Urbanite Fund II will instead pay its investors a fixed return each quarter, with the firm keeping all proceeds above that threshold, the source told Private Debt Investor.

The firm declined to comment on its fee structure.

Fund II launched earlier this year and is targeting $500 million – five times the size of its debut vehicle, which launched in the spring of 2017 and closed on $100 million in the spring of 2018. That vehicle is completely deployed.

The firm has raised $100 million for Fund II so far. The fund will lend to US properties in large and coastal markets, specifically focusing on single-family, multifamily, master-planned communities and condo properties.

Urbanite offers capital for acquisitions, development, construction, bridge loans, special and distressed situations. It aims to maintain a mix of senior and mezzanine lending for more balanced risk and return in its portfolio.

The fund’s targeted investments fall in the middle of what traditional mezzanine lenders and bank lenders are looking for, Mark Jorgensen, co-founder and managing partner at Urbanite, told PDI.

“Our capabilities are similar to those of the large sophisticated private equity firms with highly structured and complex deals,” he said.

The firm’s investment portfolio is comprised of 47 percent mezzanine debt, 45 percent senior debt and 8 percent equity. Its largest stakes are in master-planned communities and condo properties. Urbanite’s average loan size falls between $10 million and $100 million, and loans are issued for one to three years.

In terms of LPs, its two vehicles have so far received committed capital primarily from high-net-worth individuals, but it is understood that Fund II is looking to expand its investor pool into institutional limited partners.

Urbanite was founded in 2017 by Jorgensen and Steven Kay, an attorney focused on real estate. The investment team also includes Derrik Hirschfeld, who oversaw the construction lending portfolio at Citigroup, Joe Locke, a former vice president at both Lehman Brothers and Pequot Capital, and Sean Winekoff, a former real estate investment analyst at Citigroup.

The firm invests in the US real estate market, and currently has $200 million in assets under management.

“We’re excited about what we are doing and where we are,” Jorgensen said. “We have successfully built a strong platform of core investment capabilities and will be adding key positions to our team over the next six to twelve months. We are growing steadily and quite rapidly, but we will make sure it’s manageable growth, and that we do it the right way.”