ARE Asset Management Launches Offshore Funds to Capture Market Opportunities in U.S. Real Estate Debt

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Sensing a new phase in the U.S. credit and real estate markets, Jeffrey Kirsch, managing principal of Miami-based ARE Asset Management (ARE), has launched two offshore investment funds to capture commercial and residential real estate investment opportunities.

Although turbulence due to the repricing of subprime adjustable rate mortgages may continue, the U.S. real estate market has stabilized somewhat, producing some unique circumstances

    The funds, registered in the British Virgin Islands, today began investing in income-producing and opportunistic situations in the U.S. real estate credit market. Kirsch has been acquiring and resolving non-performing mortgages on behalf of non-domestic private investment funds and individually managed accounts since 1996. The funds' investment strategy will comprise non-performing residential mortgages purchased at a discount and managed to recovery or foreclosure, as well as newly originated low-LTV hard money and bridge loans on commercial properties.

"Although turbulence due to the repricing of subprime adjustable rate mortgages may continue, the U.S. real estate market has stabilized somewhat, producing some unique circumstances," said Kirsch. "There is now a glut of real estate loans on the market as financial institutions sell off commercial and residential loans, and many property owners and occupants are working to restructure their loan obligations. Given today's prevailing interest rate scenario, a U.S. real estate portfolio based upon accurate appraisals and aggressive loan servicing has the potential to yield above-average returns."

Kirsch indicates that the fallout of non-performing mortgages from Mortgage Backed Securities (MBS) continues to make non-performing whole mortgage loans available from commercial and investment banks as well as hedge funds at significant discounts, enabling ARE to precisely select the assets it acquires. Its new offshore funds will benefit from the firm's extensive and proprietary method of tracking real property market valuations down to zip-code levels throughout the U.S.

ARE's new funds are structured as a unique variant of the master-feeder arrangement, with a fixed-income feeder providing leverage to a master opportunity fund.

The ARE Fixed-Income Fund is targeted to deliver fixed monthly dividends to investors using highly collateralized, low principal risk investments. It is structured as an open-ended fund with a range of share classes, dividend rates and lock-up terms.

The ARE Opportunity Fund affords investors with the potential for higher yields through direct investments in the portfolio. The funds are open to non-domestic accredited investors, such as high-net-worth individuals, mutual funds, hedge funds and institutions.

ARE has appointed Viteos Fund Services, a division of Viteos Capital Markets Ltd., as its fund administrator. Viteos, which counts Credit Suisse among its backers, now has 35 clients and more than 160 funds comprising $9 billion in assets under administration. With offices in the U.S., India and the Cayman Islands, Viteos provides a full range of services - middle office, accounting and administration. Professionals at Viteos have a deep understanding of marketplace, technology and client needs delivered with flexibility and accuracy and in line with clients' expectations.

ARE relies on the strength of its management team and network of trading partners and service providers including: American Residential Equities, which has bought, managed and sold more than $1 billion in non-performing mortgages and REO; SeaBreeze Financial, an originator of hard-money and commercial property loans; and Plano, Texas-based loan servicing specialists Strategic Recovery Group, LLC.

Additional information for registered investors is available at http://www.arecapital.net or by calling (305) 663-9687.

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Julio Garcia or John P. David
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