NORTH AMERICA – Square Mile Capital Management and USAA Real Estate Company are to invest as much as $1bn (€753m) in new loan originations between now and the end of 2014.

The two real estate investment managers have now committed $300m to the programme.

Craig Solomon, managing principal at Square Mile, said: “Many owners of real estate now are looking for new capital sources as the debt on their properties comes due this year or next, and many traditional sources are no longer available to them.”

Square Mile said the venture would invest in three kinds of deals. 

One will be mezzanine debt, involving existing properties that have very strong fundamentals.

It will also invest in full whole loans, where there is potential for a value-added investment plan. 

The third type of investment will be one to two-year bridge loans.

The initial focus of the platform will be primary and secondary markets in the US, although the programme could include European markets in future.

“The markets in this region we would focus on will be in Western Europe,” Solomon said.
“These would be the UK, Germany, France and the Netherlands.”

The investments for the platform will be set up with a loan-to-value ratio of as much as 80% on a stabilised basis.  

The assets will include existing properties owned by a company or a firm making new acquisitions. 

Most of the deals will be in the range of $10m to $100m.

Jeffrey Fastov, a 30-year commercial property finance and investment-banking veteran, will head the Square Mile/USAA Real Estate initiative. 

A senior principal at Square Mile, his previous positions include leadership roles at Goldman Sachs, Credit Suisse and Oasis Real Estate Partners.

The lending platform is the first new investment initiative with Square Mile and USAA Real Estate since USAA became a minority owner of Square Mile in the spring of 2012.