Sponsored by the locally-based Grosvenor Investment Management and Key Real Estate Equity Capital, the fund has made its fourth investment in distressed assets: participation in a $3.4-million senior loan to finance the acquisition of a 113-lot townhome development in Cary, NC. The lot is one of the last parcels available in what will be a 250-acre master planned community called Stonewater, David Reiner, managing director of GIM, tells GlobeSt.com.

GRIP made the investment with Hopper Communities of Charlotte, NC. Hopper, which will complete the remaining site improvements, has executed a purchase and sale agreement with a major national homebuilder to acquire the finished lots.

It is the third investment for the $100 million unlevered fund, which began life with the intent of investing in mezz loans for homebuilders. GIM quickly realized that investment strategy would not be feasible--and morphed its mission to a distressed fund. The goal of the fund is to invest in distressed for-sale residential projects and debt in nine markets, Reiner explains. Investments may be in the form of senior participating debt, mezzanine debt, and equity. The fund is now 15% invested.

It is telling for the market that the fund is beginning to regularly spot opportunities: Reiner says its mission is a specific one, investing in infill markets that are expected to be the earliest to recover. At five years, the term is relatively short and the fund wants to be able to get its money out quickly. It didn't see any such opportunities until last July and even then the options were few. That is beginning to change, Reiner says. "We sat on $100 million for over a year and a half before we believed that the markets were beginning to stabilize."