NEW YORK CITY—Mack Real Estate Group said Wednesday that it had expanded the sphere of its debt activities via the launch of a lending platform for transitional and distressed assets. Managing this business will be the newly formed Mack Real Estate Credit Strategies, with MREG CEO Richard Mack heading the new venture along with CIO Peter Sotoloff, formerly of the Blackstone Group.

Mack cites three reasons for launching MRECS. “First, we believe that the returns currently available for loans secured by transitional assets in the US, and for almost all European assets located outside of the very few top-tier cities, will be superior to most other real estate investments, on a risk-adjusted basis,” he says.

Second, Mack cites the fact that Sotoloff, “whom we consider the best real estate debt professional in the market,” has agreed to join the new venture. “Third, we are now able to invest with partners who supported us in our past businesses. We believe that they see the merits of continuing our previous, very successful real estate lending program, which was nearly unique in continuing to provide very positive returns even through the last downturn.”

A cofounder of Blackstone Real Estate Debt Strategies, Solotoff observes that private lending “has a major role to play in today's real estate debt markets. Real estate finance has experienced seismic changes since the last financial crisis. The landscape for borrowers is completely transformed. Financing options for transitional assets can be limited. As a result, we see tremendous demand for flexible, experienced lenders in that segment of the debt financing market, and limited competition.”

Before joining MRECS, Solotoff was managing director and head of originations at BREDS, which he helped build into a $10-billion multi-strategy debt investment platform.  Prior to his Blackstone tenure, he was a principal of Tribeca Associates, and previously oversaw nonperforming loan acquisitions and global risk management strategies for the Morgan Stanley Real Estate Funds.

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