Cottonwood Group has closed a $1B fund for special situations, including everything from refinancing and new development opportunities to the acquisition of struggling properties. Distressed assets will be a heavy emphasis.
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Roughly $300M has already been placed, mostly via loans that include the option to take control of properties in the event of a default, Bloomberg reported. The fund initially closed in 2023 after targeting $500M and has since generated a 20% internal rate of return.
Roughly $2T worth of CRE loans are set to mature through 2027, $591B of which are potentially troubled, according to Newmark’s second-quarter U.S. capital markets report.
“We’re two years into a high-rate environment and there’s a lot of stress and distress out there,” Cottonwood founder Alexander Shing told Bloomberg. “We see this as a once-in-a-decade opportunity.”
The fund has already invested in the residential tower at 262 Fifth Ave. in Manhattan, a redevelopment site including the Viper Room nightclub in West Hollywood, and a mixed-use project in Austin.
Contributors include Taiwan-based Fubon Financial Holding Co., Korea Investment Holdings and the North Atlantic States Carpenters Benefit Funds.
CORRECTION, SEPT. 10, 12:00 P.M. ET: A previous version of this story included information about a deal conducted by a different company with a similar name. It has since been removed.
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