Investcorp’s Real Estate Debt Platform Continues Strong Growth

NEW YORK--(BUSINESS WIRE)--Investcorp’s U.S. based real estate group announced today that its debt investment business continues to be active with its acquisition of several mezzanine loans that are collateralized by various single-asset properties and multiple-asset hotel portfolios located across the United States. The combined portfolios of junior and senior mezzanine loans, valued at approximately $210 million, were sold to Investcorp for an undisclosed amount.

Investcorp completed these transactions using capital from its newly formed Investcorp Real Estate Credit Fund, L.P., as well as capital from the group’s first mezzanine fund. Investcorp Real Estate Credit Fund, L.P. is a $1 billion vehicle funded with capital raised from Investcorp and its clients and a Gulf sovereign wealth investor. The Credit Fund was formed to acquire whole loans, mezzanine loans, and commercial mortgage-backed securities (CMBS) collateralized by well performing commercial and residential real estate assets throughout the United States.

John Fraser, co-head of Investcorp's real estate group, said, “As the market transitions, opportunities emerge for Investcorp's debt investment business. We have been an active investor in the U.S. real estate market for more than 25 years, and, as such, are well positioned to draw upon our extensive relationships within the lending community to seize on opportunities to grow our debt business and to deliver superior risk-adjusted returns to our partners and investors. These lending relationships are particularly relevant in today’s marketplace, both as a reliable source of debt financing for property acquisitions as well as a source of product for the debt acquisition activities.”

“Our most recent debt investments epitomize Investcorp’s flexible approach to investing, and highlight our ability to successfully invest in the current challenging market conditions,” said Jonathan Dracos, co-head of Investcorp's real estate group. “The expansion of our debt platform, evidenced by our significant increase in transaction volume, is a nice complement to our equity investment activity. The plan is to continue to expand the debt platform.”

Recent Debt Investment Details:

• Two mezzanine loans purchased from a major Wall Street investment bank. The first is secured by a portfolio of nine, full-service hotels across eight states. The second is secured by a hotel property in Houston. All the hotels operate under highly regarded national brand names.
• Four mezzanine loans purchased from a major commercial bank on two nationally-branded Times Square hotels in New York City.

Investcorp has been active in the area of originating and acquiring debt for several years. Since 2002, the group has originated or acquired approximately $600 million of debt and preferred equity. Beginning in late 2006, the group formalized its activities in this area with the launch of its Mezzanine Fund I, a $108 million fund created to originate and acquire mezzanine debt, preferred equity, and CMBS in the United States. With the formation of the $1 billion Credit Fund, Investcorp seeks to further invest in debt opportunities in today’s marketplace.

About Investcorp Real Estate

With offices in New York and Los Angeles, Investcorp’s real estate group is a well-capitalized, value-oriented and opportunistic real estate investor with an investment portfolio in excess of $6 billion (total capitalization) and a long and distinguished track record of success. Investcorp’s real estate team is experienced in the acquisition, development, financing, leasing, management and disposition of a wide variety of property types including office, retail, hotel, residential, mixed-use and luxury resorts. The team takes a flexible approach to investing and works closely with local operating partners and developers on both a co-investment and direct investment basis.

In addition to the team’s controlling equity investments, Investcorp’s real estate group has over the last few years steadily expanded its investment activities to include originating and acquiring mezzanine debt, subordinated debt and commercial mortgage-backed securities (“CMBS”) in U.S. commercial and residential real estate. In 2006, Investcorp organized its activities in this area into a formal program with the launch of its Mezzanine Fund I, and the group recently closed the Investcorp Real Estate Credit Fund, L.P., a $1 billion vehicle.

Investcorp’s real estate group is part of Investcorp, a leading provider and manager of alternative investment products. Investcorp has offices in New York, London and Bahrain and is publicly traded on the London Stock Exchange (IVC) and Bahrain Stock Exchange (INVCORP). The firm has five lines of business: real estate, private equity, hedge funds, technology investment and Gulf growth capital. Founded in 1982, Investcorp has grown to become one of the largest and most diverse alternative investment managers in terms of both product offerings and geography, and currently has over $17 billion in invested assets under management. Additional information on Investcorp can be found at www.investcorp.com, or through the contact below.