Brasa Capital Management has closed its firstdebt fund, Brasa Credit 1. The debt fund willprovide debt and equity for commercial deals of up to $100 million.The debt fund is supported by pension fund investors and hasalready closed its first two deals, a $16 million preferred equityinvestment in a multifamily development in Denver and theacquisition of a $4 million sub-performing note secured by amixed-use asset in Los Angeles.

"Before COVID-19 hit, the unprecedented liquidity in the marketfollowing a 10-year economic expansion resultedin underwriting assumptions requiring everything to goperfectly in order to make a deal work," GregGalusha, managing director at Brasa Capital, tellsGlobeSt.com. "We were getting increasingly uncomfortable withvaluations and our exposure to value; we decided to move down therisk curve to a more conservative position in the capitalstack.  Raising a credit vehicle would allow us to makemore attractive, risk-adjusted returns."

Following the pandemic, Galusha says that there is increasingdemand for capital sources to provide liquidity to distressedowners. "The debt markets were pulling back and cash flow was beinginterrupted," he says. "There was a need from existing owners toraise rescue capital to carry their projects back to stabilizationat the end of the pandemic, and we knew our credit vehicle couldfill that need."