- Madison Realty Capital closed its latest debt fund at $2.04B, just shy of its $2.25B target, reflecting the challenges in today’s fundraising market.
- Despite the shortfall, the fund represents the largest US-focused real estate debt fund closed so far in 2024.
- The firm sees more opportunities due to competitors stepping back, and believes lower interest rates could drive transactions.
According to Bloomberg, Madison Realty Capital, a prominent commercial real estate lender, has successfully closed its latest debt fund with $2.04B in equity commitments.
While this fell short of the $2.25B target set in 2022, it remains a significant achievement in a tough fundraising environment.
According to Madison co-founder Josh Zegen, the firm is well-positioned to capitalize on market opportunities as many competitors remain inactive.
Competitive Debt Market
Notably, Madison Realty’s latest fund is the largest US-focused real estate debt fund to close in 2024, surpassing the $1.4B raised by ACORE Credit Partners II earlier this year.
Private lenders like Madison have gained market share as traditional banks pulled back following the collapses of Silicon Valley Bank and Signature Bank.
Madison Managing Principal Adam Tantleff noted there’s substantial demand for well-capitalized, non-bank lenders, particularly as commercial property prices begin to stabilize.
Economic Pressure
While commercial property prices remain 19% below their 2022 peak, they have seen a 3.3% rise this year through August.
The market is showing early signs of recovery, which could accelerate with the prospect of lower interest rates.
According to Madison co-founder Josh Zegen, the firm is well-positioned to capitalize on market opportunities as many competitors remain inactive even with an impending rate cut.
Broader Strategy
The new fund focuses on originating loans for properties in major U.S. metro areas, with an emphasis on residential real estate and opportunistic investments in hotels, industrial, retail, and other sectors.
To date, Madison has completed 26 transactions totaling $3.79B with this fund, deploying 45% of its capital commitments.
With more than $21B in assets under management, Madison remains optimistic about future opportunities in CRE, despite challenging market conditions.
