As real estate loans dry up, a Dallas commercial real estate firm has created a $100 million fund to target troubled properties.
Bradford’s new Opportunities Fund is hoping to acquire North Texas properties affected by the current credit crunch.
Rising interest rates and tougher lenders’ credit standards have put many commercial real estate lenders out of business, leaving billions of dollars of loans coming due and struggling to attract new debt.
“The current high interest rate environment is causing lenders to struggle to secure financing and owners to have to sell assets due to cash flow issues,” Kevin J. Santaularia, Bradford’s president and CEO, said in a statement. “Therein lies the opportunity for Bradford and our private investor partners.”
Bradford Opportunity Fund II plans to acquire office and industrial projects throughout North Texas.
“In this new era of asset values resetting, we believe market distressing will present rare opportunities for agile local investors,” Santaularia said. “Our fund is designed to give high net worth investors access to rare opportunities that have historically only been accessible to the most savvy local real estate investors, like those in Bradford.”
Bradford’s fund wants to buy more than $100 million a year in commercial real estate.
Santaularia said the fund is already working on two transactions, including acquiring a 50% stake in a Dallas office for a total project cost of $30 million.
“The entire D-FW of office and industrial is a dart board and this is where our operational expertise can add value at new price thresholds,” he said.
The Dallas-based commercial real estate firm has been in business since 1989 and has invested in more than $250 million in real estate. Bradford also manages more than 15 million square feet of Dallas-Fort Worth area real estate for institutional clients, lending institutions and investors.
Bradford is just one of several commercial real estate companies setting up a fund to take advantage of the troubled properties expected to grow over the next few years.
Nationwide, commercial property prices fell 8% in March from a year earlier, the biggest annual decline since 2010, MSCI Real Assets reported.
Tightening credit and uncertainty about real estate values caused office building purchases in the D-FW area to fall by more than 80% in the first quarter.
In the Dallas area, lenders are tracking an increase in commercial real estate loans backed by billions of dollars of commercial mortgage-backed securities.
