Private investment firm Orangewood Partners has launched the Peaceable Street Capital (PSC) preferred equity platform in an effort to capitalize on the volatile CMBS markets.
The platform brings on a former Kimco Realty Corporation heads David Henry and Fred Kurz as chief executives. It will invest preferred equity capital in deals ranging from $1-$20 million and will target 8-9 percent returns.
“We think our timing is good,” Henry told Real Estate Capital. “The spreads have widened in the CMBS market, while banks have pulled back a little bit and a lot of CMBS loans are maturing that people were doing at the top of the market.”
The New York-based private investment firm’s new platform comes as other private non-bank lenders are filling a gap left by lenders grappling with new regulations and the rocky CMBS market, as Real Estate Capital has reported.
Henry noted that preferred equity is often a sought-after substitute for the mezzanine lending that many of those firms are making.
“Mezzanine debt is tricky legally,” he said, adding that preferred equity is a “much simpler form of raising capital than mezzanine lending; that’s why lenders prefer it.”
Investments will be made across a range of commercial real estate assets in the US and Canada, from multi-family, office, self-storage, industrial, retail, mobile home parks, parking, health care and hotels.
The new platform completed its first transaction this January on a preferred equity investment in the multi-family property in San Antonio, Texas, and its second in March involving another preferred equity investment in a portfolio of self-storage facilities.
Alan Goldfarb, founder and managing partner at the private investment firm, said Orangewood Partners started a year ago in New York with the support of several investor partners, consisting of high net worth individuals as well as institutional investors and looks to invest in growth businesses as well as other special situations.
“David Henry and Fred Kurz have exceptional track records of success identifying and investing in unique real estate assets with strong growth and income potential,” said Goldfarb in a prepared statement.
Henry served as the Chief Executive Officer at Kimco from 2009 – 2015 and as its Vice Chairman from 2001 – 2015. Prior to joining Kimco in 2001, Henry was at GE, where he served as the Chief Investment Officer and Senior Vice President at GE Capital Real Estate from 1997 – 2001, and was responsible for helping manage real estate investments totaling more than $20 billion in 11 countries worldwide.
Kurz, former general manager of preferred equity investments at Kimco, was a founding member of Kimco’s Preferred Equity Program. He also directed several different departments, including Kimco Select, Structured Investments, and Risk Management. Prior to joining Kimco, Kurz served as a Senior Vice President and Managing Director at GE Capital Real Estate’s Eastern Territory, covering 12 states that generated $1.5 billion in structured investments during his tenure.