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NEW YORK CITY-In what it says is the largest deal of its kind, Capital Trust Inc. on Tuesday announced the final closing of an $845.5-million real estate mezzanine fund. Co-sponsored by Citigroup Investments Inc, the fund expects to originate $2.5 billion in loans and investments over the next two years.

The fund will invest in all real estate markets, According to Ed Shugrue, CFO for Capital Trust, the manager of CT Mezzanine Partners II, LP. He notes, however, that like all Capital ventures, CT Mezzanine Partners II will focus on large deals. Mezzanine loans made by the fund primarily will be on properties that are priced at $100 million or higher and meet Capital’s basic lending criteria.

“At Capital Trust, our lending mandate is nationwide and encompasses all property types,” Shugrue says. “Our only limitations are size and cash flow. We tend to focus on properties of $100 million or more with cash flow and meaningful sponsor equity.”

Shugrue says the success of the fund can be partly attributed to the economic upheaval that has characterized the last 12 months. When Capital began marketing the fund a year ago, investors who had cut their teeth on tech stocks and the huge returns they’d been delivering looked askance at the seemingly antiquated investment opportunity presented by CT Mezzanine Partners II.

But as pink-slip parties became a daily occurrence among the ping-pong-at-the-office set, cooler heads prevailed, and investors suddenly saw the Capital fund as a safe haven.

“In light of the volatility in the broader equity markets and in the venture/tech markets in particular, our investors found our investment philosophy and our investment product to provide extremely compelling relative value,” Shugrue says.

Capital Trust, based here, is an investment management and finance company that focuses on the commercial real estate industry. To date, the company and the funds under its management have originated more than $2 billion of mezzanine investments in more than 60 separate transactions.

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