REAL ESTATE NEWS

S3 Capital is seeing what it calls a "strong" traction for fundraising, fetching $730 million to date, which is being deployed across its multifamily lending strategy.

Part of this includes $450 in equity commitments from S3 LB Real Estate Credit Fund III, which will remain open through the first quarter of next year. The company said it is targeting to raise another $200 million through the fund and is putting its "hard cap" at $850 million.

So far, the pool has attracted various institutional investors, such as those involved in insurance, pension funds and international endowments, according to Robert Schwartz, co-founder of S3 Capital.

“These groups are increasingly drawn to the fundamentals of specialized real estate credit as an asset class and have confidence in our approach to underwrite and service loans in supply-constrained, high-growth markets," he said in a statement.

"It’s rewarding to partner with investors who share our conviction and recognize this growing opportunity.”

Fund III is focusing on providing construction and bridge financing that are senior secured and first lien for ground-up multifamily developments. The target is for middle-market real estate projects. No specific regions were listed — but major markets in the U.S. will be pursued.

S3 Capital said that it currently sees an opportunity for experienced lenders to get involved, noting that regional banks have shown hesitancy.

To date, S3 Capital has closed 13 loans, representing an $808 million volume. Some recent financings that the New York-based firm has completed include one for a Denton, Texas, 306-unit multifamily project and another in Midtown Manhattan for a 28-story residential mixed-use property.

Additionally, over the past six months alone, S3 Capital has completed more than $1.5 billion in loan originations.

In the era of economic uncertainties and elevated interest rates — CRE fundraising has suffered overall. A recent survey from investment management platform vendor Agora found that top firms saw a 7.7% year-over-year decline in capital raising.

But still, some others like S3 Capital see opportunities in the current landscape. For example, ACRE wants to take advantage of the housing shortage and recently closed a credit fund, raising $1 billion.

Source: GlobeSt/ALM