Origin Credit ramps up new multifamily-focused debt fund 

The firm expects to see a rise in portfolio and property recap opportunities over the next six to 18 months as traditional lenders pull back. 

Origin Credit Advisers, the credit arm of Chicago-based private real estate company Origin Investments, launched a new commercial real estate debt fund to tap into dislocation in the lending market that is coming as banks scale back their activity. 

The firm launched its Strategic Credit Fund last month to invest in a mix of Freddie Mac-originated products, commercial real estate collateralized loan obligations, preferred equity investments and senior bridge loans.

The fund complements the firm’s existing Origin Multifamily Credit Fund as well as other Origin investment vehicles, Tom Briney, president and chief investment officer told Real Estate Capital USA. As with its multifamily-focused fund, the Strategic Credit Fund similarly intends to only invest in, or originate, loans which are backed by multifamily real estate as collateral.

Origin launched the fund to specifically address what it sees as unique opportunity in the market as bank lenders are offering lower proceeds to sponsors.  

“Most of [those lenders] will only lend to 50-55 percent loan to value compared to 65-75 percent 18 months ago. This gap in financing need is where [the fund] can potentially have a meaningful impact in providing liquidity to market participants, with the goal of generating returns for our investors,” he added. 

The fund has an evergreen or perpetual structure with options for investors to create liquidity starting in the second year of their investment. All investors must be qualified investors or qualified purchasers. 

Briney is also seeing increased opportunities for portfolio and property recaps. “I expect the frequency of the opportunities to accelerate over the next six to 18 months, and we plan to participate,” he said. 

While there is relative calm in the markets today, Briney sees an increasingly challenging market due to rising interest rates and lender pullback. 

“By the end of 2022, there were several lenders who simply weren’t making loans at all and remain on the side-line today.  The challenges in the financing market were exacerbated by the collapse of Silicon Valley Bank, Credit Suisse, Signature Bank, and the distress at First Republic,” he added.