ACRE Seeks To Capitalize on Housing Shortage With $1B Credit Fund
ACRE thinks it's the perfect time to deploy capital in the housing lending sector, as the country faces a shortfall that's been estimated in the millions.
Through ACRE Credit Fund II, the firm has raised $1 billion through a final close, which was fully subscribed. The dedicated credit fund received global investor demand from a wide range of sectors, including family offices, asset managers, insurance companies, pensions and endowments.
It's unclear if the pool will solely focus on multifamily — but clearly it will at least be a major focal point. After all, ACRE's roots date back to providing institutional-grade capital in the asset class.
But the timing of the close is key. ACRE pointed out that the current state of the market features elevated interest rates, a need for capital solutions and less bank lending. As a result, the New York-based firm noted that borrowers are looking for established lenders that can provide flexibility. ACRE has completed $3 billion across four public securitizations to date, three of which came from CRE CLOs. Also, the company has made 195 debt and equity investments in real estate, totaling $7 billion. Some of ACRE's solutions include match-term financing, non-recourse and non-mark-to-market.
Add that to the fact that the limited housing supply is "creating durable demand for multifamily," according to the fund manager.
"We believe the current environment represents one of the most compelling backdrops for multifamily credit in over a decade, fueled by a persistent housing supply-demand imbalance, a wall of loan maturities following historic interest rate hikes, and a fundamental shift in capital treatment across global banks," Daniel Jacobs, managing partner at ACRE, said in a statement.
"With over $4 billion in lending capacity, deep borrower relationships, and a history of disciplined execution across cycles, ACRE is exceptionally well-positioned to deploy capital into this dislocated market."
A recent report from Zillow estimated that the typical homebuyer would need a $17,000 raise to afford the average home. That research also estimated that the national housing shortfall grew to 4.7 million in 2023.
Source: GlobeSt/ALM