Pearlmark Announces First Closing of Sixth Mezzanine Fund

Chicago – August 12, 2024 – Pearlmark is pleased to announce the first closing of its sixth high-yield credit investment fund, Pearlmark Mezzanine Realty Partners VI, L.P. (“Pearlmark Mezz VI” or the “Fund”). Pearlmark Mezz VI will serve as the firm’s exclusive subordinated debt investment vehicle, fulfilling borrower demand for gap financing solutions on recapitalizations, acquisitions, and development projects. Since 2001, Pearlmark has originated over $2.0 billion in 159 subordinated debt investments. Pearlmark Mezz VI will target domestic institutional real estate assets through a variety of debt instruments, primarily focused in mezzanine lending. Pearlmark Mezz VI will primarily invest in multifamily and other adjacent sectors, including student housing, active senior, and build-for-rent communities, as well as in industrial/logistics sectors. The Fund will also consider investments in mixed-use, medical office, and grocery-anchored retail properties. Pearlmark covers the top 30 metropolitan areas nationwide and will consider other selective locations.

The first closing for Pearlmark Mezz VI totaled more than $185 million in commitments, including discretionary managed accounts. The targeted fund size for Pearlmark Mezz VI is in excess of $400 million. Loan sizes are expected to range from a minimum of $5 million to $50 million or greater in combination with co-investment capital on larger loan sizes. Final capital closing for Pearlmark Mezz VI is expected in Q1 2025.

Pearlmark Mezz VI’s predecessor, Pearlmark Mezzanine Realty Partners V, L.P. (“Pearlmark Mezz V”), has made 22 investments in high-yield credit with two additional investments pending. Pearlmark Mezz VI will continue the middle-market focus of Pearlmark Mezz V. “Higher-for-longer” interest rates and pull-back from the banks continue to put stress on overall credit availability in U.S. commercial real estate, fostering demand for Pearlmark’s mezzanine capital. Pearlmark continues to see strong transaction flow. While remaining sensitive to the ever-changing market, Pearlmark will seek to focus on investing with first-rate sponsorship, in institutional-quality assets, and in markets with strong fundamentals.

“Continuing dislocation in the real estate credit markets with widespread pullback by the banking sector and the higher interest rate environment negatively impacting valuation and underwriting levels have created strong sponsor demand for Pearlmark’s gap financing structures. We strive to be a mezzanine provider of choice for borrowers seeking fast, flexible capital solutions; senior lenders requiring capable and experienced co-lenders; and investors pursuing attractive risk-adjusted returns,” stated Doug Lyons, Managing Principal and Head of Debt Investments for Pearlmark.

Stephen Quazzo, CEO of Pearlmark, further commented, “This Fund closing, the sixth in our series since 2001, represents an important step toward growing Pearlmark’s credit business by efficiently matching the needs of our real estate borrowers with those of our institutional investors during this complex period in the capital markets. We are thrilled and delighted with the strong level of interest we are seeing from both groups.”

About Pearlmark

Pearlmark is a Chicago-based investment firm that targets domestic core-plus to value-add real estate opportunities via commingled funds, separate accounts, and joint venture structures. Since 1996, the Pearlmark team has sponsored more than 15 real estate equity and debt investment programs and completed 584 real estate equity and debt transactions on behalf of investors, representing $5.6 billion in equity capital commitments, $14.3 billion in gross investment value, and 159 originated loans aggregating over $2 billion in commitments. Pearlmark is dedicated to creating value for its investors and offers a range of investment opportunities nationwide across various property types (primarily industrial and multifamily). For more information, please visit https://www.pearlmark.com.