Inland American Sees Opportunity in RE Debt

Inland American Real Estate Trust Inc., through a subsidiary, has committed to invest $100 million in Boston-based Concord Debt Holdings L.L.C., whose specialty is the acquisition of real estate securities and other real estate-related loans. The initial investment is $20 million, with as much as $80 million more over the next 18 months. Concord Debt Holdings is a joint venture between Winthrop Realty Trust and Lexington Realty Trust. Both companies are REITs, with Boston-based Winthrop owning a variety of commercial properties, and New York-based Lexington specializing in net-leased properties. Under the terms of the deal, contributions by Inland American will be used primarily for the origination and acquisition of debt instruments, including whole loans, B notes and mezzanine loans. According to Oak Brook, Ill.-based Inland American, dislocations in the credit markets make now a good time to invest in commercial real estate loans and other forms of debt. Also, provided certain conditions are satisfied–including payment of Inland American’s 10 percent priority return–both Winthrop and Lexington may reduce their aggregate capital investment in the JV to $200 million through distributions of principal payments from the retirement of existing loans and bonds in Concord’s current portfolio. Inland American is also a REIT with a diversified portfolio and part of the Inland Real Estate Group of Companies Inc. Inland Institutional Capital Partners Corp. negotiated the deal on behalf of Inland American.