Helping a Rapidly Growing Debt Fund Attract Institutional Capital Through Independent Third-Party Valuations

A rapidly growing debt fund was seeking to raise $1 billion in capital to invest in bridge loans on commercial real estate across the U.S., in the multifamily, retail, hospitality and industrial sectors. These transitional loans, which borrowers use to improve and add value to a property, tend to involve greater risk because they are susceptible to a range of variables, from construction delays to market fluctuations.  

The investment firm knew it needed to demonstrate best practices to attract institutional investors and add scale to its fund. Rather than perform debt valuations internally, the firm wanted to obtain independent third-party valuations to facilitate reporting to its equity partners. Given the relative risk of its investment focus, and uncertainty in the macro environment, the fund needed a partner with deep knowledge, expertise and experience in commercial real estate, who could provide thorough and insightful valuations.

Using best-in-class processes, models and controls, SitusAMC onboarded the loans and analyzed the different attributes and features of each investment, as well as the wider market, to value the portfolio. SitusAMC provided robust client service, diving into the unique “story” behind each loan, and communicating regularly with the client about loan activity and price changes. The valuation included analysis of market trends and credit metrics to accurately reflect current asset values. 

The team leveraged the synergies and cumulative knowledge across SitusAMC, from professionals in CRE origination, servicing and asset management, special servicing, appraisal management and research, to ensure the valuations reflected a deeper understanding of current trends in the CRE and capital markets sectors.   

SitusAMC’s regular valuations provided investors with the clarity to understand the market value of their investments and helped to demonstrate that the debt fund had implemented proper controls and accountability measures. Working with seasoned, experienced valuation partners with a deep CRE knowledge to value their illiquid investments strengthened the fund’s credibility and appeal to investors. The client successfully raised $1 billion for its first fund and subsequently launched several others.