Loan Fund Targets $200 Mil. of Equity
RCG Longview seek to raise $200 million of equity for a fund called the RCG Longview II that will invest in high-yield debt. The vehicle will write mezzanine, bridge, and preferred equity investments.
March 3, 2003 – Real Estate Alert
Four New York real estate pros operating under the name RCG Longview are seeking to raise $200 million of equity for another fund that will invest in high-yield debt. The vehicle, RCG Longview II, will write mezzanine and bridge loans, as well as some first mortgages. It will also make preferred-equity investments.
RCG’s principals, who also serve as senior executives at three New York real estate firms, are: Michael Boxer, a partner of money-manager Ramius Capital Group, Jeffrey Feil and Jay Anderson of old-line investment firm Feil Organization; and John Estreich of mortgage-broker Estreich & Co.
While the four executives are acting individually, they sometimes source investments through their firms. For example, if Ramius or Feil loses out in a bidding contest on a property, RCG might make a mezzanine loan to help the winner fund its acquisition.
With first-mortgage lenders becoming more cautious because of the weak economy, property owners increasingly need additional financing, according to Boxer. RCG anticipates a flurry of activity as war anxiety makes lenders tighten their belts even more. “We won’t turn any appropriate deals down,” said Boxer.
Although RCG does not seek to control properties, it is prepared to do so if a borrower defaults. “We are ready, willing and able to step into a property, as the owner, as the operator, should it come to that,” he said.
RCG targets an internal rate of return of 13%, after fees. It does not use leverage, except with first mortgages and some bridge loans, for which it will employ up to 50% debt. The new fund will have an initial equity closing within 60 days.
The fund operator traces its roots to 1998, when Feil, Anderson and Estreich formed Longview Funding. Their first fund, which had $35 million of equity, is fully invested.
Boxer joined shortly thereafter, and “RCG” was added to the company’s name, for Ramius Capital Group, which has a $3.2 billion portfolio concentrated in multi-family properties. In 2001, RCG raised $124 million for RCG Longview I, which it just finished.
