Real estate investment firm Redwood Real Estate Partners said yesterday that it has launched a new investment fund focused on the distressed residential real estate market called Occasio Distressed Residential Fund or Occasio ResCap, a release from Redwood stated.
With the launch of Occasio ResCap, the company aims to leverage current market
conditions as well as acquire $500 million in distressed residential real estate assets while offering sellers a way of liquidating those assets.
As an operating platform, Occasio ResCap will manage the acquisition and handle the risk analysis, pricing, underwriting and liquidation of distressed assets. Because it is a fully funded entity that is sponsored by Redwood, Occasio ResCap has the capital to close sales and mitigate sellers' risk, according to the firm's release.
Redwood has recruited John Duden, one of the founding partners of Fasthold Capital, to lead Occasio ResCap. Fasthold specializes in the purchase, restructuring, and liquidation of residential whole loans and REO portfolios. Duden has more than 20 years of experience in real estate finance and distressed asset acquisitions.
"We are in the midst of a very challenging market and recognize that liquidity is scarce," said Carl Chang, founder and CEO of Redwood Real Estate Partners. "We launched Occasio ResCap to provide an effective exit strategy to sellers of residential real estate assets looking for liquidity while offering the certainty, integrity and experience for which Redwood is known."
"Redwood has a long standing reputation as a highly experienced real estate investor, and I am excited to combine my experience in residential real estate with Redwood's expertise," stated Duden, president of Occasio ResCap. "With our mutual aptitude and experience plus an
established fund, sellers of distressed real estate assets can look forward to a quick, transparent transaction and the confidence of knowing the sale of their assets will be executed flawlessly."
According to the companys Web site, Occasio Distressed Residential Fund's strategy it to buy bulk portfolios of residential REOs as well as late stage defaulted whole loans via direct relationships with mortgage banks and financial institutions. The firm is implementing a multi-pronged exit strategy depending on the asset type.
The return profile is 25% IRR net to the investor. The firm plans to employ up to $150 million in equity using no leverage, although a small amount of leverage might be employed during the recovery phase of a cycle.
The firm plans to focus on pools of $10 to $60 million of asset value in the Western U.S. with a bias for select markets along the East Coast. The fund will concentrate on 1-4 unit residences between $100,000 to $900,000 in value with zero to light rehab required.
In short, according to the Web site, the funds strategy is to buy assets on a bulk basis at considerable discounts from financial institutions that need to create liquidity. Individual assets in the pools are valued and underwritten to ensure the funds ability to quickly market and re-sell homes at discounted retail levels priced lower versus competing distressed inventory.