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IRVINE, CA- The Bascom Group has launched a $250 million opportunity fund to invest in distressed real estate assets, aiming to control “non-performing and sub-performing real state assets,” it says, by purchasing senior and mezzanine loans of the underlying real estate.

Jerry Fink, a managing director and co-founder of the Irvine-based firm, tells GlobeSt.com that Bascom has not yet closed on any of the loans but it is bidding on a number of them and would expect to close some of its first deals soon. Fink says the distressed properties are located primarily in Northern California, Washington State, Oregon, Arizona and Texas, in many cases in areas where certain classes of space were overbuilt. Bascom expects to invest the $250 million over the next two years, Fink tells GlobeSt.com, with the capital coming from institutions and high-net-worth individuals.

Bascom says it will targeting pension funds, life insurance companies, loan conduits, and loan sales advisors, looking to buy loans ranging from $5 million to $50 million. David S. Kim, also a managing director and co-founder of Bascom, says the new fund is designed to build on the company’s experience in repositioning properties. The firm has completed transactions totaling more than $1 billion of value-added real estate deals since its founding in 1996. It has been an active buyer of apartment properties throughout Southern California throughout that time, acquiring more than 10,000 units to date in Los Angeles, Orange, San Bernardino, San Diego, and Riverside Counties as well as Hawaii, and the Central California Valley.

Bascom says its approach will offer “attractive operating partnership for originators and note holders to stabilize or dispose of distressed assets.” Kim says Bascom sees a significant number of delinquent hotel and retail loans available for purchase, as well as increasing numbers of non-performing and sub-performing office, industrial, and multifamily loans over the past several months. Fink adds that continued weakness in the commercial property and multifamily sectors “should result in a significantly increasing number of non-performing loans over this next year.” Although many borrowers have been saved by the historically low interest rate environment, Fink says, many of those who locked in high rate conduit debt in the mid to late 1990s are suffering and cannot pay off their loans due to high prepayment costs that prevent them from refinancing at lower rates.

Derek Chen, Fink and Kim are the founders of Bascom, a private equity fund. The company recently purchased American Office Centers out of bankruptcy and formed Premier Business Centers, which has become the largest privately held executive suite operator on the West Coast.

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