Texas-based loan servicing firm C-III Capital is looking to raise $115m for C-III High Yield Real Estate Debt Fund IV, Real Estate Capital has learned based on a recent regulatory filing.
C-III Capital Partners raked up $159m for the previous fund in the series (C-III High Yield Real Estate Debt Fund III L.P), launched in January 2014. The first fund was launched in March 2011, about a year after the company was formed.
The firm declined to comment on the new fund, the fourth in the series, but debt fund managers familiar with the firm suggested that it might focus on mezzanine and subordinate debt originations in North America, targeting returns in the 9%-13% range.
The investor base for high-yield debt funds has traditionally consisted of insurance companies; but given the yield hunt in a low interest rate environment, they have become increasingly appealing to pension funds, university endowments and trusts, they said.
C-III Capital Partners, a wholly-owned affiliate of Texas-based Island Capital Group, specializes in originations and servicing, in addition to fund management and principal investing.
The company, led by CEO Andrew Farkas, grew quickly into one of the largest loan servicers in the country after some high profile acquisitions following its 2010 launch. That year it bought Centerline Capital Group’s institutional real estate debt fund management and commercial mortgage loan servicing businesses. And in 2011, it acquired NAI Global, a New Jersey-based network of independent commercial real estate firms; as well as the commercial real estate special servicing and credit default obligation (CDO) management businesses of private real estate investment management company JER Partners (JER).
Today the company manages assets worth $3.7bn through its investment advisory subsidiary C-III Investment Management. As of March 31, 2015, C-III’s primary servicing portfolio consisted of 193 loans totaling $3.5bn, according to a Fitch Ratings report released in June.