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Highline Real Estate Capital Unveils $350M Distressed Commercial Real Estate Fund, Targeting Southeastern Properties

Highline Real Estate Fund 1, L.P., is set to provide both equity and debt financing to commercial property owners who are facing challenges in selling or financing office, retail, multifamily, and industrial properties. According to David Moret, Principal of Highline, the firm has a strong track record in office and retail investments, often made directly or in partnership with others. He anticipates that industrial and multifamily property investments will likely be pursued with a partner.

Since March 2022, the Federal Reserve’s series of interest rate hikes have contributed to a flattening of commercial property sales. The increased borrowing costs have led to reduced bids on commercial properties, with many property owners hesitant to sell.

Moret notes a significant gap between bid and ask prices in the commercial real estate market, resulting in a 70 percent decrease in transaction volume from its peak. He sees this as a familiar pattern in market cycles, characterized by an initially exuberant market followed by a major shift, and ultimately, a period of waiting for capitulation.

Highline Real Estate Fund 1 is poised to deploy up to $75 million in discretionary capital commitments, $100 million in joint-venture commitments with other funds, and $175 million in debt financing.

Established in 2016, Highline, under the leadership of Moret, Principal Matt Papunen, and Partner David Milgram, has successfully acquired, improved, and sold multiple commercial real estate properties. Moret brings over two decades of experience from CREC Real Estate in Columbus, Ohio, where he served as a partner and led the firm’s acquisition and investment group. Papunen, a former Managing Director of Lennar Corp. subsidiary Rialto Capital Management, spearheaded acquisitions. Milgram, a former Vice President of the Sterling Organization, focused on retail.

While South Florida remains a key focus for the trio, they also have their sights set on other high-growth markets in the Southeast, including Orlando, Tampa, Atlanta, and the Carolinas. Moret emphasizes the robust fundamentals in their chosen markets, affirming that even assets facing capital structure challenges benefit from strong tailwinds.

In parallel, another real estate investment fund with a similar focus has been launched in South Florida this year. Arnaud Karsenti’s Miami-based 13th Floor Investments introduced a $300 million fund targeting opportunities in expanding markets nationwide, as well as distressed assets in South Florida and other regions.

“For over 15 years, US Asset Loans have been providing funding to Real Estate investors”
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