New York-based real estate investment manager Madison Realty Capital (MRC) has raised nearly $310m for the second close of Debt Fund III, more than half its $600m fundraising target, Real Estate Capital sister publication Private Debt Investor reported.
The firm’s third debt fund will acquire non-performing loans and preferred equity investments as well as originate or refinance senior-secured loans, mezzanine loans and preferred equity investments, employing up to 50 percent leverage.
MRC will originate loans as large as $100m, with one- to three-year terms, coupons ranging from 8% to 13% and loan-to-values up to 75 percent, MRC managing principal Adam Tantleff told Real Estate Capital following the fund’s 145m first close in August.
“We take advantage of market inefficiencies, where you’re getting paid significantly above market returns versus the risk you’re taking,” Tantleff said. “At the end of the day, you’re getting equity-like returns.”
Commitments so far include $150m from the Oregon Public Employees Retirement Fund earlier this month and $40m from the New York State Teachers Retirement System in November. The fund has a hard cap of $750m.
MRC is also currently investing its second debt fund, Sullivan Debt Fund, which raised more than $350m between 2011 and 2013. The firm has invested approximately $2.5bn in the multifamily, retail, office and industrial sectors.