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Palladius seeks $300M in real estate debt investments

Palladius Capital Management (“Palladius”), a technology-based real estate investment manager and strategist for multifamily student housing and hospitality properties, today announced seeking $300 million in commercial real estate debt investments in the U.S., according to a press release.

The news comes after the Texas-based firm’s announced the formation of its vertically integrated investment management platform in March, accompanying a $15 million Series A fundraise, intended to capitalize the company and secure an equity subscription line. 

Funding round participants included Charlesbank Capital Partner, JE Dunn Chairman Timothy Dunn, InterMedia Group of Companies CEO Robert Yallen, MiLA Capital co-founder Shaun Arora and Max Cutler, founder of Parcast and an executive at Spotify.

Now, the company says it is targeting construction and transitional commercial real estate debt investments, with plans of holding them on its balance sheet. The release says its main focus is “originating, acquiring and managing first mortgages, B-notes, mezzanine debt and preferred equity.”

Nitin Chexal, CEO of Palladius, explains that boosting the company’s platform with its equity is timely, owing to lenders’ pause on activities due to increasing interest rates and economic instability. 

“This strategic decision adds to the firm’s overall capabilities, aligns with our tactically contrarian investment philosophy and demonstrates our ability to add capital solutions based on where we believe we can achieve attractive risk-adjusted returns,” he said in the release.

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The firm says it is “well-capitalized” to start making investments to take advantage of “favorable” market conditions and is seeking “high-quality” borrowers. It says business models must be sound, with a need for “flexible” financing solutions in the a range of $2 million to $40 million. Intended investments span across asset classes, including multifamily, single-family and student housing, industrial, hospitality.

Wealth Management reports VC investment in proptech was previously induced by an investor’s “fear of missing out” in the last several years. But today, capital volume flowing into proptech has decreased and startups are also receiving less funding.

It attributes this decrease to tech startups “slashing” their valuations in 2022, which created a “lower urgency” among venture capitalists to put capital into proptechs.

Palladius, on the other hand, decided to expand its debt platform to introduce new strategies in a conducive market for investments, as per the statement. It also creates short and long-term value for the investors to identify and capitalize on risks.

The firm reports it has acquired and operated over $8 billion in commercial real estate assets and lent more than $1 billion in real estate debt.

In other recent proptech news, FotoNotes, a residential property field operations mobile software provider, acquired Solar-focused field operations platform SiteCapture. Multifamily brokerage firm The Mogharebi Group (TMG), arranged the sale of Maywood, a 13-unit community in Los Angeles, California, for $5.9 million.

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