Canyon Partners launches its largest US debt fund to date
Canyon Partners Real Estate closed Canyon Laurel Fund II, a real estate debt vehicle with more than $ 650 million in assets through the fund and associated co-investments.
Canyon Laurel Fund II is Canyon’s largest US real estate debt vehicle to date and represents a significant increase over the predecessor fund of $ 530 million, including related co-investments. Canyon’s direct real estate investment arm, which has doubled in size in recent years, now manages a real estate portfolio of over $ 6 billion in project capitalization.
The new fund targets investments in senior and subordinated debt in all major types of properties in major US markets. Canyon has already deployed over 60% of the fund in primary origins and secondary market purchases.
Robin Potts, co-director of real estate at Canyon, says about 70% of his predecessor’s investors returned to the Canyon Laurel Fund II. “The COVID-19 pandemic has created an even more compelling environment for real estate debt as lenders, homeowners and developers have faced increasing liquidity needs, while Canyon’s positioning at the onset of the crisis allowed us to act quickly and capitalize on the growing opportunity. together, ”Potts said in a prepared statement.
American, Japanese, Korean and Australian investors participate in Canyon Laurel Fund II. In addition, public and corporate pensions, endowments, financial institutions and family offices have joined the fund.
Canyon joins a growing number of new debt funds are entering the market. By early May, Berkadia had nearly 130 different debt funds, according to Hilary Provinse, executive vice president and head of the company’s mortgage banking services.
“It’s either private equity, debt fund vehicles or some traders that have raised funds in which they invest either preferred stocks or debt securities in different parts of the stack,” Provinse told GlobeSt. com. “So there is only a ton of cash on the debt funds.”
Provinse monitors underwriting standards for debt funds. “While we are looking for aggressive entry and exit debt yields, I would say underwriting is generally pretty responsible,” she told GlobeSt.com.
In addition to expanding its debt platform, Canyon has been active in the equity arena. In 2020, it announced an investment of $ 375 million from CalPERS for its Emerging Manager program (which Canyon has been managing since 2012). It also hit the hard cap in 2019 with a fundraising of $ 500 million for a joint venture partnership with global infrastructure company AECOM (AECOM-Canyon Partners). He has closed equity investments in the area of qualified opportunity for residential projects over more than $ 500 million of project capitalization in the past two years.