Goldman-Backed Firm to Buy Struggling Commercial-Property Debt


(Bloomberg) -- Goldman Sachs Group Inc. is backing a real estate firm to buy commercial real estate loans that are hit by the pandemic.

Directed Capital is seeking to acquire as much as $600 million of debt tied to everything from retail to senior housing and hospitality properties. The St. Petersburg, Florida-based firm has received a combined $60 million in financing from Goldman Sachs and Valley National Bancorp for its current round of fund-raising.

The expectation is that large banks will try to offload poor-performing loans amid a sudden and severe economic downturn, said Chris Moench, chief executive officer at Directed Capital. The firm has already completed deals for loans backed by restaurants and small offices since the pandemic hit. But the real opportunities will start in the fall, he said.

“There will be some good ones in the hospitality sector,” Moench said. “It’s a business that usually falls sharply during recession and is relatively quick to rebound post-recession.”

Directed Capital, which has bought more than $1.6 billion in loans and mortgages over the past two decades, is being cautious given the current economic uncertainty.

“It’s interesting times in life to think through,” Moench said. “Is this an opportunity, or is somebody taking advantage of us by selling something to us that’ll never recover?”

©2020 Bloomberg L.P.

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