Fundraising - FEBRUARY 5, 2014

Latitude fund holds $404m final close

by Reg Clodfelter

Latitude Management Real Estate Investors has held an approximately $404 million final close on Latitude Management Real Estate Capital III, the latest fund in the firm’s first-mortgage bridge loan fund series.

The fund will originate value-add first-mortgage bridge loans ranging in value from $5 million to $30 million. It will invest across property types in primary and secondary markets throughout the United States. Approximately 40 percent of the fund’s capital will be used to originate loans for multifamily properties, 25 percent for office properties, 20 percent for hospitality properties and 15 percent will be for promising investment opportunities in alternative sectors.

The loans will be short term, three to five years, allowing the fund to deploy capital twice over the five-year investment period. It is expected to use 50 percent leverage, creating an initial investment capacity of more than $800 million. Since its first loan origination in December 2012, LMREC III is approximately 40 percent invested, having already closed on more than $400 million in loans in 17 states.

“The ability to close over $400 million in just over a year has been a product of our transparent closing process and reputation for sticking to transactions from beginning to end,” Craig Oram, managing director at Latitude, said in a statement.

Investors have been primarily state teachers’ and employees’ pension funds, but also include some European funds, insurance companies and one corporate fund; the fund’s 10 largest investors represent nearly 95 percent of total capitalization. The fund is expected to achieve net returns for investors in the range of 10 percent per year.

“We have assembled a team whose quality underwriting, asset management and relationships with the mortgage banking community allow us to close loans quickly and provide flexible and practical solutions for our borrowers,” said Latitude’s president, Glenn Sonnenberg, in a statement.

Based in Beverly Hills, Calif., Latitude Management is a real estate investment and finance company with more than $3 billion in loans closed to date. Latitude is said to have co-invested a meaningful amount in the fund.

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