Investcorp makes investments in commercial real estate debt

The loans, with a face value of approximately $170.9m, were purchased by Investcorp at a discounted rate. Details of the transaction were not disclosed.

Mazin Al Khatib, Managing Director and head of Investcorp's placement business in the United Arab Emirates and Saudi Arabia said:

"This opportunity to invest, at favorable prices, in sound US commercial real estate assets exists now for two reasons. The difficult economic environment is forcing sales. Over leveraged buyers are being forced to recapitalize, and lenders, who need to liquidate to address balance sheet issues, are being forced to sell outright. At the same time, dislocation in the capital markets has made mortgage debt scarce, so other forms of debt capital are needed to fill the gap. It is an historic investment opportunity created by this combination of the availability of strong assets and the scarcity of debt capital."

"At this time of transition, Investcorp has a powerful position in the US real estate debt business. Our team there has strong buying capacity and relevant expertise, plus industry relationships built over 30 years in US real estate."

Investcorp completed these transactions with capital from its Investcorp Real Estate Credit Fund, L.P., a vehicle formed in September 2008, and from its $108m Mezzanine Fund I, formed in 2006, which is now fully deployed. Both Funds acquire high-quality mortgage loans, mezzanine loans, and commercial mortgage-backed securities (CMBS) from distressed lenders as well as originating mortgage and mezzanine debt to satisfy lack of capital.

The senior mortgage loan was secured by an office headquarters building located in Washington, D.C. The two mezzanine loans were secured by Class A office buildings in New York and Los Angeles, and were acquired from a private investor. The B-Note of a senior mortgage was secured by four self-storage facilities located in the boroughs of New York, and was purchased from a major commercial bank.