Veteran commercial real estate lenders Ethan Penner and Chad Carpenter are preparing to launch Reven Office REIT, a new real estate investment trust that will focus on providing financing to office properties across the US.
Penner and Carpenter are hoping to raise $1 billion for La Jolla, California-based Reven via lead investor and a blind pool initial public offering. The REIT will use the financing to originate first mortgages, mezzanine debt and preferred equity investments. Part of the firm’s investment strategy will be to make strategic investments in distressed office debt and acquired properties at significant discounts.
The duo is launching the company at a time of extreme dislocation for the office sector, with little capital from banks – historically a key lender for office owners and investors – available to acquire, renovate or refinance debt on these properties.
Carpenter, citing data from Commercial Edge, noted that total office debt across the US stood at $920 billion as of October 2023.
“Nearly $150 billion of mortgages on US office buildings are maturing by the end of 2024, and just over $300 billion of loans will mature by the end of 2026, which presents a sizable opportunity for well-capitalized debt platforms,” he added.
Carpenter continued: “We believe the current downturn will provide many opportunities to lend to and acquire office debt and invest in buildings at a low basis.”
Penner, who led the commercial mortgage-backed securities group at Nomura Securities in the 1990s, has also held senior roles at Drexel Burnham Lambert and Morgan Stanley. He also founded CBRE Capital Partners, a commercial real estate investment management platform, and launched construction lender Mosaic Real Estate Investors which was later acquired by Ready Capital.
Penner will be the chairman of the board while Carpenter, the founder of value-added investment firm Reven Capital, will be the chief executive. Carpenter’s previous experience includes working as the chairman and chief executive of Reven Housing REIT, which was sold to Pacific Oak Strategic Opportunity REIT, and the founder and chief executive of Equastone, an office-focused investment company.
Penner believes the office market is at a significant inflection point marked by widespread office market dislocation and a growing demand for financing. “We believe we can create a market-leading credit platform that caters to high-quality office owners and investors, who are faced with extremely limited financing options,” he added.