Mavik Capital raising real estate fund as regional banks retreat

Mavik Capital Management LP is looking to raise $515 million to finance US middle-market commercial real estate, an area beset by a liquidity shortage as regional banks pull back from the space.

The firm aims to achieve an internal rate of return of 15% to 25% with the new fund, called Mavik Real Estate Special Opportunities VS2, according to a person with knowledge, who asked not to be identified discussing the matter. That rate of return would be similar to the returns achieved on an earlier fund.

The opportunistic real estate investment firm, which recently led a $75 million investment to recapitalize the Waldorf Astoria in Washington, formerly the Trump International Hotel, is creating the vehicle as regional banks retreat amid tougher regulatory requirements and higher interest rates. That’s pushed borrowers who need to refinance maturing commercial property loans into the arms of private credit lenders, who have been eager to make those loans given the high interest rates they can charge.

Bond investors have punished banks with heavy exposure to commercial real estate, potentially adding even more pressure to the lenders’ profits as Wall Street scrambles to assess how widely pain in property debt will spread through the financial system.

The co-chief executive officer of Fortress investment Group, Joshua Pack, recently said he sees a $1 trillion opportunity for investors in troubled assets, and in one recent example KDM Financial is looking to raise $350 million to invest in multifamily bridge loans and other types of commercial property loans.

Mavik’s investors include pension funds, family offices and institutional investors, including Blackstone. Blackstone took a stake in the firm back in 2021, when Mavik was already looking to capitalize on stress brought...