Michael Bailey, an Edwardsville, Illinois-based private equity manager, has raised $25 million for a limited liability company called FREP Debt I, according to documents filed with the Securities and Exchange Commission.
The money came from a single, undisclosed investor. The funds, Bailey said, will be used to buy commercial mortgage backed securities (CMBS) tied to multifamily housing development commercial loans.
“(CMBS) are somewhat out of favor right now, but we see it getting back into favor a bit in the market and believe it’s a good opportunity for us,” he said.
According to commercial real estate services firm CBRE, commercial loan maturities are expected to surpass $400 billion annually this year and next. Commercial loan maturities totaled about $300 billion in 2015, according to CBRE.
CBRE estimated close to 29 percent of CMBS loans in 2017 could face some difficulty in refinancing; it said the office and retail sectors could have the highest proportion of troubled loans.