Walker & Dunlop Investment Partners is raising capital for a targeted $500 million debt fund, which will focus on originating bridge loans anchored by multifamily properties.
The Bethesda-based investment management company believes volatility in the banking sector combined with a wave of expected loan maturities over the next few years mean there will be a greater need for short-term debt capital, said Marcus Duley, managing director and chief investment officer.
“With regional commercial banks pulling back, there is an opportunity to step in and fill the void that they have left and are going to leave,” Duley told Real Estate Capital USA. “In terms of capitalizing on that opportunity, we are in the process of launching a debt fund that will provide multifamily bridge loans for transitional business plans, including lease-ups, repositions, opportunistic and value-add acquisitions, recapitalizations and permanent financing timing delays.”
The strategy, Walker & Dunlop Debt Fund, L.P., will target domestic and international institutional investors and is a continuation of a broader business focus providing multifamily bridge loans. Separate from this fund, the firm is also interested in the industrial sector due to positive market dynamics, similar to the residential sector, Duley added.
Hitting the reset button
Walker & Dunlop Investment Partners is launching the fund against a broader valuation reset in the US commercial real estate market. The reset will continue to be felt as transaction volumes pick up as sponsors are forced to make decisions around distress or maturing loans, Duley added.
“There is a lot of money sitting on the sidelines, and there is going to be lots of opportunity to make bridge loans into the multifamily space, provide preferred equity, and to bridge the capital need,” he said.
“There’s also opportunity to invest in middle market, real estate on the equity side, with smaller, maybe less institutional owner operators that are able to buy at really attractive basis today as a result of market disruption and reset.”