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Oak Real Estate Partners targets institutional capital via new debt fund

The $500m strategy will focus on bridge opps across most sectors and market sizes.

Oak Real Estate Partners is casting a wide net to build up its institutional investor roster with a new fund that will target lending opportunities in most market sizes and asset sectors in the US.

The Bloomfield Hills, Michigan-based balance sheet lender – currently held by White Oak Capital Holdings and operating as the investment arm affiliate of Red Oak Capital Holdings – rolled out a new $500 million private real estate financing investment fund on May 17.

The fund, Oak Institutional Credit Solutions, marks the firm’s first vehicle targeted specifically toward endowments and foundations. The strategy is geared toward balance sheet credit lending on short-duration commercial mortgage assets collateralized and secured in the first-lien position by high-quality income-producing properties, according to the firm.

Brook Scardina, managing partner overseeing capital markets and investments at Oak Real Estate Partners, said the fund represents a scaling and platform expansion of the existing investment opportunity to support institutional demand while capitalizing on the existing high-quality dealflow and transactional volume.

“The small balance sheet lending market is extremely fragmented and underserved and this represents a unique investment opportunity to capitalize on the inefficiencies for the benefit of institutional investors while providing downside protection,” Scardina said. “Based on the velocity of capital and high-quality of the dealflow within the firm, there is significant value to be harvested and realized in the execution of the strategy and experience of the team.”

The firm is aiming to include an estimated 50 to 100 assets in the fund’s portfolio at any time once fully deployed with a mix across geographies, tenant compositions, industries and structure and property types. Oak Real Estate Partners has placed emphasis on loans within the multifamily, retail, office, industrial, mixed-use and hospitality sectors among others within primary, secondary and tertiary US markets.

Gary Bechtel, managing principal and CEO at the firm, said the fund will be geared across US geographical regions and classes to enshrine diversification. “The strategy will not lend on land, take entitlement risk or provide financing on ground-up construction as part of its execution,” he said.

Oak Real Estate Partners secured more than $60 million of pre-launch indications of interest comments before rolling the new fund out. The Oak Institutional Credit Solutions fund is targeting average annual preferred returns of 6 percent, with additional waterfall economics contained in the offering, according to the firm.

The fund is a perpetual strategy looking to raise $200 million from foundations, endowments and multifamily offices and will seek to leverage by another $300 million, according to the firm. Oak Institutional GP, the managing member, will commit at least $2.5 million exclusive of the capital commitments.