Signal Capital Management is busy getting its house in order with the addition of two hedge funds and PIPE offering within the next few months.
The New York-based multi-strategy shop, founded last year by Shane Rodgers, is partnering up with Tidewater Capital Partners to launch the Signal Tidewater Asset-Backed Fund to exploit opportunities in the commercial real estate market. The firms are looking to raise $250 million for the new offering.
The Asset-Backed fund will make commercial real-estate mortgage bridge loans, asset-backed non-real estate commercial loans, and purchases of—and investments in—portfolios of distressed and non-performing real estate loans, according to fund documents. It will allocate 60% of its portfolio to new asset-backed loans and 40% to non-performing real estate loan portfolio acquisitions and workouts, making loans and investments with time horizons from six to 24 months.
“Signal and Tidewater set up this joint venture to exploit our competencies,” said Rodgers, adding that Signal will provide administrative and back office support for the new offering while Tidewater, a North Palm Beach, Fla., asset-based lender, will source the deals. “Everybody and their brother wants to get into the non-performing business but they have no idea how to do it,” said Martin Ormon, Tidewater’s founder.
“It’s a boys club and it always has been. It’s not like you can just call up Lehman and buy $300 million of their regional non-performing loans. It’s very strategic and labor-intensive meaning you have to have people on the ground because inspecting those properties is a very big part of it.”
Ormon added that the subprime market is “in the third inning of a nine inning game” and predicts that the 20% default rate in the the subprime market will “probably increase to 30% when it’s all said and done.”
The Signal Tidewater Asset-Backed Fund charges a 2% management fee and a 20% performance fee with a $500,000 minimum investment requirement. It also sports a two-year lockup period.
Other products in the pipeline from Signal include a quantitative long/short fund and a private investment in public equity fund, both to be launched sometime next year.