Highline Real Estate Capital is aiming to expand its Southeast US commercial real estate portfolio with the launch of a fund for value-add and distressed opportunities across the region.
The Miami-based manager rolled out Highline Real Estate Fund 1 on October 23 and has projected the strategy will reach $350 million in total purchasing power upon deployment.
Highline told Real Estate Capital USA that $175 million of the fund will be used for debt financing, $100 million for joint venture commitments and the remaining $75 million for discretionary capital commitments.
“We have seen dramatic changes in the capital markets since the Federal Reserve commenced its rate-hike cycle, which is creating significant dislocation in the real estate market,” said David Moret, founder and president at Highline. “The Southeast region is in a unique environment where operating fundamentals remain reasonably strong, but the restricted debt landscape, asset value declines and wave of loan maturities are poised to cause distress.”
Highline is targeting value-add and distressed office, retail, multifamily and industrial acquisition opportunities through the fund with flexibility around deal typing that will range from direct investments, joint ventures and rescue capital for existing asset owners.
Matt Papunen, principal at Highline, said the fund is in a prime position to move quickly on such acquisitions: “We are in the early stages of what we expect to be an extraordinary opportunity to acquire high-quality, performing assets at extremely attractive prices. Seizing this opportunity requires fresh capital and the expertise to allocate it strategically.”
Highline, a commercial real estate investment and advisory firm formed in 2016 now led by Moret, Papunen and partner David Milgram, has built its portfolio by acquiring, enhancing and exiting similar situations across the Southeast US. The firm’s portfolio spans office, retail and multifamily assets throughout the region.
The fund launch tracks with the wider trend of private credit’s increasing attention and allocation toward commercial real estate debt opportunities. With select regional and national bank lenders absent from the market, other investment managers including insurance companies, debt funds and mortgage real estate investment trusts have been left to try to fill the financing void.