Dive Brief:

• Last week, Canyon Partners Real Estate announced the final close of the Canyon US Real Estate Debt Fund III, a debt vehicle with approximately $1.2 billion of assets, surpassing its $1 billion fundraising target, in a news release shared with Multifamily Dive. 
• CRED III, which has already seen 44% of its capital allocated, will target various senior, subordinate, primary and secondary market real estate debt investments and credit securities across the U.S. 
• For Canyon Partners Real Estate, the real estate direct investing arm of Dallas-based Canyon Partners, a global alternative asset manager, CRED III is its largest U.S. real estate debt fund to date, nearly doubling its $650 million predecessor vehicle.

Dive Insight:

Canyon closed its debt fund as a massive wave of debt maturities is about to hit commercial real estate. In a September report, CRE services firm JLL said that $1.5 trillion in debt will come due by the end of 2025.

Though it will invest across property types, CRED III’s focus will be on multifamily and other defensive asset classes benefitting from supply-demand imbalances and demographic tailwinds. Apartments make up 40% of the maturities hitting next year, according to Bloomberg.

In this current climate, Robin Potts, partner and Canyon's chief investment officer of real estate, said Canyon sees “a generational opportunity for real estate debt investing.”

"In today's evolving economic landscape, including a 'higher for longer' interest rate environment, we see significant opportunities to provide flexible capital solutions to borrowers while creating attractive risk-adjusted returns for our investment partners,” Potts said in the release. 

CRED III’s investors include sovereign wealth funds, public and corporate pensions, endowments, financial institutions, registered investment advisers and family offices from the U.S., Asia, Middle East, Europe and South America.

Founded in 1991, Canyon Partners Real Estate has over $26 billion in assets under management, according to the news release. Over the last 10 years, the firm has invested approximately $5.2 billion in debt and equity capital across approximately 180 transactions, capitalizing roughly $21.1 billion of real estate assets, focusing on debt, value-add and opportunistic strategies. 

Canyon isn’t alone in amassing capital in funds as maturities approach in 2025. In September, Atlanta-based Cortland, the eighth-largest apartment owner in the country with 80,000-plus homes, announced a programmatic joint venture with private investment firm Declaration Partners Real Estate to invest preferred equity capital in multifamily real estate assets. 

The venture with DPRE, which is backed by David M. Rubenstein, co-founder and co-chairman of Washington, D.C.-based financial services firm The Carlyle Group, has initial capital of $100 million and will seek to provide fixed-income principal investments of between $5 million and $35 million that are subordinate to debt from senior lenders. Over the past five years, the two firms have invested in several multifamily assets.

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