To receive daily news and analysis, subscribe to Bisnow's free suite of newsletters. A pair of national real estate investment managers closed their U.S. office credit fund with $1.1B in investor commitments. Hines and Rialto Capital secured 126 investors for their Hines Rialto Credit Partners, a co-general partnership focused on U.S. office credit investments.
The fund required a minimum investment of $100K, according to a filing with the U.S. Securities and Exchange Commission. With the rapid growth of private credit, Hines said it believes investors are searching for real estate credit strategies grounded in specialized underwriting and deep market knowledge.
"Yield alone does not tell you the quality of the risk," Alfonso Munk, Hines' global co-head of investment management, said in a statement. "In real estate credit, understanding the underlying asset — what it is worth, how it performs and how it may hold up under pressure — is becoming increasingly important as the market works through a significant refinancing cycle." The real estate investment managers launched the office credit fund in 2024 and gathered $700M in investor commitments in its first close, Commercial Observer reported. Following its latest close, the co-general partnership is expected to deploy capital toward U.S. office credit investments through a strategy that includes debt acquisition and new lending.
Rialto Capital CEO Jeff Krasnoff said his firm's extensive real estate lending experience complements Hines' deep market and operating expertise. Together, the companies bring a unique perspective to opportunities where market complexity can create openings for experienced investors. Hines Rialto Credit Partners supplied a $228.9M bridge loan this summer to a joint venture of PGIM, Tribeca Investment Group and Meadow Partners.
The loan was used to refinance the Textile Building in the Midtown South neighborhood of Manhattan. In August of last year, the fund purchased nearly $100M in loans for a trio of office buildings in Midtown Manhattan owned by Hilson Management. Flagstar Bank issued the loans, secured by the 71K SF building at 349 Lexington Ave. in Murray Hill, the 80K SF property at 185 Madison Ave. and the 83K SF building at 5 West 37th St.
The co-general partnership also provided $58M to refinance a Columbia Pacific Advisors office property in New Jersey and $91M to help Saca Development buy the One America Plaza office tower in San Diego. In addition to its office credit fund with Rialto Capital, Hines has begun moving back toward development to generate profit in the current market. Munk told Bisnow last month that development now makes financial sense across multiple sectors and that the company is looking for locations where a "scarcity advantage" has emerged.
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