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NEW YORK CITY-Locally based Carlton Group Ltd.’s investment business, Carlton Strategic Ventures LLC, has formed a new joint venture with “a major insurance company” to acquire performing discounted loans and originate and provide “low cost” mezzanine and preferred equity loans on a principal basis. The venture is called CSV Capital LLC and according to Carlton chairman Howard Michaels, CSV Capital intends to be fully invested over the next 12 months. Michaels tells GlobeSt.com that the “major insurance company” who is backing the fund is Prudential.

The fund’s goal is to “take advantage of the current credit dislocation and achieve above average returns for itself by acquiring existing performing real estate assets at a discount.” The acquisition parameters of CSV Capital are as follows: the purchase of loans ranging in amounts from $25 to $50 million per individual transaction, and up to $150 million per transaction for large portfolios; all asset types–except hotels will only be considered if included in a portfolio of diverse assets–65% to 85% market adjusted loan-to-value for last dollar invested; and mostly floating rate loans but will consider purchasing fixed-rate loans with maturities no greater than 10 years

CSV Capital intends to continue purchasing discounted mezzanine loans, B-Notes, participation interests, mortgage and mezzanine whole loans and preferred equity interests in performing assets secured by real estate located in major markets across the country.

According to a prepared company statement, “CSV Capital has a competitive advantage over other ‘vulture’ distressed and opportunistic funds currently in the market due to its lower cost of capital and its affiliation with a major insurance company. CSV Capital’s lower cost of capital will enable it to purchase assets at a lower yield than its competitors while still being able to achieve its targeted returns.”

As GlobeSt.com previously reported, CSV has already acquired more than $300 million in secondary market B-note, mezzanine and preferred equity loans in 10 stand alone transactions and has a great deal of experience in pricing, underwriting and quickly closing these types of investments. A company source told GlobeSt.com at the time that the $300-million closing was a follow-up to Carlton’s formation of the new $1-billion fund.

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