Hedge fund Deer Park Road Management Co is actively raising capital to invest in distressed commercial real estate debt, launching its Commercial Mortgage Opportunities I fund with a target of US$500 million. Chief Investment Officer Scott Burg emphasized an 8% hurdle rate for investors, aiming to capitalize on significant price dislocations in the office space market caused by elevated interest rates leading to defaults. Founded in 2003 by Michael Craig-Scheckman, Deer Park manages over US$3 billion in assets and is looking to attract investors from the Middle East and Europe. Burg noted that valuations in the sector have plummeted by 60% to 80% from original loan amounts, indicating a ripe environment for investment amid increasing delinquencies and defaults in the real estate sector [303e941d].
In a similar vein, Howard Marks, co-founder of Oaktree Capital Management, has pointed out that highly-leveraged assets within private equity and real estate are presenting opportunities for distressed investors. He highlighted that risky corporate borrowers, particularly those backed by private equity, are facing rising borrowing costs. Currently, approximately $199 billion of corporate debt in the United States is trading in distressed territory, and Oaktree Capital sees potential in distressed lending and bargain-hunting. While Marks expresses caution regarding real estate bargains due to challenging valuations, he remains optimistic about private equity and distressed investing [2c715101].