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3650 REIT bolsters bridge, event-driven platform with $575m commitment

The investment comes as the firm is carving out a niche in originating preferred equity to finance large-scale portfolio acquisitions.

3650 REIT, a Miami-based commercial real estate investment company, has lined up $575 million of institutional capital to expand its bridge- and event-driven investment strategy.

The firm lined up the capital from new and existing institutional investors, with the commitments bringing 3650 REIT’s bridge- and event-driven platform to $1.35 billion. The commitments came from public pension systems and sovereign wealth funds that wanted to tap into the firm’s strategy of originating loans on behalf of high-quality borrowers in strong US markets, said Jonathan Roth, co-founder and managing partner.

3650 REIT’s bridge- and event-driven platform originates short-term bridge loans and makes event-driven investments for borrowers that are pursuing ground-up construction, acquisitions, repositionings, recapitalizations or partnership restructurings. The firm also has a separate fixed-rate platform that targets stable properties, Roth noted.

As part of this, the firm in October closed a five-year, $89 million preferred equity investment on behalf of RREAF Holdings, which is acquiring a three-tranche, 4,000-unit portfolio of apartment properties in the Sunbelt for roughly $534 million. The firm has completed a handful of transactions like this, supplementing agency debt on large-scale portfolio deals backed by properties with a strong outlook, noted Toby Cobb, co-founder and managing partner.

“This capital is needed behind Fannie Mae and Freddie Mac agency debt and is not easily accessed since you need [the agencies’] approval to provide it,” Cobb said. “Additionally, Fannie and Freddie do not provide supplemental loans on assets until there has been a positive track record demonstrating several years of performance.”

3650 REIT anticipates more demand for bridge- and event-driven loans. “The result of the recent increase in multifamily rents across the board is a significant amount of ‘trapped equity,’” Cobb added. “Because of this, we have been able to help our borrowers access this trapped equity to invest in renovations to make their properties even more competitive.”

3650 REIT manages in excess of $5 billion in loans and investments across its BED and SCF lending platforms. The firm’s loan portfolio has zero directly originated loans that are delinquent or are on non-accrual. Cobb noted that commercial real estate continues to be a popular option for investors who are concerned about inflation.

“Commercial real estate broadly represents an asset class that is a fantastic hedge against inflation,” Cobb said. “Rent growth can elevate an asset along with inflation. Multifamily is a great example of this, but it can also occur in other, shorter-dated leased assets such as the in-line leases on grocery-anchored retail or self-storage, to name a few of our favored asset classes in today’s market.”

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