CenterSquare, Temasek Launch $200M CRE Debt Fund
CenterSquare Investment Management has launched a new commercial real estate debt co-investment vehicle in partnership with Temasek Holdings, Singapore’s $285 billion sovereign wealth fund. Both entities will contribute $100 million each to invest in high-quality subordinate real estate loans.
The portfolio builds on the strategy used in CenterSquare’s debt fund series, which started in 1999. The strategy aims to generate risk-adjusted, equity-like returns through mezzanine loans and debt-like preferred equity investments, primarily secured by stable, income-generating rental properties.
“In the current, higher-rate environment, we continue to see many borrowers in need of ‘gap capital’ as loans come due and they are no longer able to secure the same level of mortgage loan proceeds that were available previously in the lower-rate climate,” said Michael Boxer, managing director of CenterSquare’s private real estate debt vertical.
The first tranche of capital will be invested alongside CenterSquare’s latest debt fund in largely pre-identified deals. Consistent with previous funds in the series, there will be a strong emphasis on multifamily assets.
Richard Gorsky, managing director, private real estate debt added, “In my opinion, now is one of the best times I’ve seen in my career to invest in commercial real estate debt.”
Temasek’s partnership with CenterSquare, which began in early 2022, reflects the fund’s shift in focus as it recalibrates its property exposure. In recent years, Temasek has moved away from traditional equity stakes in developers and has increasingly concentrated on structured investments, including lending against high-quality assets.
Founded in 1987, Pennsylvania-based CenterSquare manages more than $14 billion in assets.