Mesa West Closes Debt Fund with $752M
- Nov 22, 2013
Mesa West Capital got more than it expected when it closed its Mesa West Real Estate Income Fund III L.P.—$102 million more, to be precise. The debt fund manager raised a total of $752 million in equity commitments, outdoing its target of $650 million.
The closing comes three years after Mesa West wrapped up the fund’s predecessor, which closed with $214.5 million more than its $400 million target. It appears investors had been eagerly awaiting a third opportunity. “There were a large percentage of repeat investors,” Ryan Krauch, a principal with Mesa West, told Commercial Property Executive. “We are also seeing increased interest from overseas, and the equity commitments for Fund III included our first foreign investor.”
Fund III is a closed-end real estate debt fund providing short-term first mortgage debt of roughly $15 million to $150 million for the acquisition and recapitalization of transitional institutional-quality commercial real estate assets throughout the U.S. Multi-family, office, retail, industrial and hotel properties are all fair game. The first loan from Fund III was originated in March of this year, providing Emmes Asset Management with $55 million in first mortgage debt for the recapitalization of a 376,000-square-foot office complex in Newport Beach, Calif. To date, nine loans totaling approximately $400 million have been originated through Fund III.
The commercial real estate market has changed in the three years between the closings of Fund II and Fund III, and it shows in the originations. “In terms of (loans by) sector, there’s been an increase in hotels and a larger percent of the office portfolio,” Krauch said. “We saw less multi-family, but now we’re seeing a pickup in that sector as Fannie/Freddie pull back.”
With the success of Fund III, there will absolutely be a Fund IV, Krauch added. “We like our size range where we are now; it allows us to put the entire portfolio out the door in two to three years.”