Derby Lane Debuts With $5B In Lending Power, Focus On Office Conversions

An emerging real estate credit firm has secured nearly $2B in investments, making its debut one of the largest in the private CRE lending sector, according to Bloomberg.

Derby Lane Partners is launching with $1.8B lined up and has backing from investment giants Fortress Investment Group and Koch Real Estate Investments. The firm also has backing from Liberty Mutual Investments, Silver Creek Capital Management and BTG Pactual. The firm is expected to have $5B to lend.

Derby Lane was launched by Adam Piekarski, who has more than 20 years of investment experience in private equity, commercial real estate credit and corporate credit. He previously served as the co-head of real estate credit at BDT & MSD Partners. 

The firm is expected to focus on offering floating-rate mortgage loans in New York, Boston, Dallas and Miami, according to an earlier Bloomberg report. 

Piekarski told Bloomberg that Derby Lane will cast its net across asset classes and property types, depending on opportunities that present themselves in the market. He singled out loans for office conversions as such an opportunity. 

The firm’s first closed loan was to extend $62M for a Chicago office-to-resi project last month.

Piekarski said Derby Lane is positioned to take advantage of a market moment when property values are low but there is growing certainty of market fundamentals. He said these factors have made the lending environment its best in a decade. 

Alternative investment is ascending in commercial real estate, as banks have been cutting back their commercial lending to balance their books. Moody’s predicts nonbank lenders will take on more than 10% of commercial property financing in the next three to five years, according to The Wall Street Journal.