Origin Credit Advisers is launching a new multifamily credit fund aimed at taking advantage of shifting fundamentals in the housing sector and the renewed investor appetite for income-generation strategies secured by hard assets.
The firm's Origin Real Estate Credit Fund, an interval fund registered with the Securities and Exchange Commission, seeks to generate consistent income, preserve capital and offer portfolio exposure to both public and private multifamily credit strategies. The fund blends investments across the capital stack, including Freddie Mac–backed bonds, commercial real estate collateralized loan obligations (CRE CLOs) and direct loans to developers and operators. Its credit investments are generally supported by multifamily real estate.
The entity managing the pool is an affiliate of Origin Investments, a leading multifamily real estate investor with more than $3.6 billion in assets under management. The new closed-end fund's design reflects an effort to capitalize on a growing set of opportunities stemming from refinancing and construction completions in the multifamily sector.
Tom Briney, president and chief investment officer at Origin, described the fund as an evergreen vehicle, meaning both raising and deploying capital can continue indefinitely.
"We can defensibly be at $1 billion at some point in 2027, which will allow larger investors to feel comfortable about their investment relative to fund size, ultimately leading to accelerated fund growth from there," Briney told GlobeSt.com.
He noted that the fund primarily targets investment-grade opportunities, which tend to be larger in scale.
"The sweet spot for our investments today ranges from $30 million to $75 million, with the ability to deviate for the right opportunity," according to Briney.
Briney contrasted credit funds tied to projected cash flows with those backed by tangible real estate assets.
"Real estate funds, backed by hard assets, have more opportunities to limit downside risk if the investment doesn't go as planned," he said.
"Additionally, real estate-backed credit funds structured as real estate investment trusts can reduce an investor's tax liability on ordinary distributions by 20%."
He also pointed to what he called one of real estate's "best-kept secrets": the Freddie Mac advantage. These types of loans, he explained, have posted some of the lowest loss rates in commercial real estate dating back to the early 1990s but still deliver some of the strongest returns.
"Freddie Mac is very selective about whom they partner with and has an exceptionally long and thorough due diligence process, creating high barriers to partnership," Briney said. "Most credit investors don't have access to certain high-performing Freddie Mac bonds."
Another overlooked opportunity, Briney added, lies in bridge-to-permanent loans in multifamily credit.
"Many borrowers are wrapping up construction projects or have reached the end of their 2022 or 2023 business plans and need to refinance," he said.
"These opportunities are prevalent and yield low double-digit returns, similar to equity with credit risk. While the opportunity is in plain sight, executing the business plan requires significant infrastructure and expertise. Many groups may have expertise or infrastructure, but not both."
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