Stockbridge Seeking Deal To Takeover Fund That Acquired Peery/Arrillaga Portfolio

Stockbridge is seeking a deal to take over the management of the $2.6B RREEF America REIT III real estate fund. This is the same fund that acquired the 119 office and research and development properties from Peery/Arrillaga which we raised questions about last month, as well as the Sunnyvale Town Center project which construction has been halted on and is in the tank.

I actually received some “hate mail” after I posted that article about being wrong.

Stockbridge Real Estate Funds has expressed interest in making an investment in RREEF America REIT III, a move that likely would involve Stockbridge replacing Deutsche’s RREEF unit as the manager of the fund, according to DeWitt Bowman, the RREEF fund’s lead independent director. He said it was too early to make any deals and that no formal offer has been submitted.

“We’re not discouraging any offers,” Mr. Bowman said. “We’ll take a look at any reasonable offer and evaluate it, and hopefully try to preserve as much of shareholders’ value as we can.”

Now I could be wrong, but that sounds like distress to me. And if that wasn’t enough for you, here’s this tidbit too:

RREEF told investors in May that at least six such loans are coming due this year, but the fund has only $77 million in cash. The loans include a $109 million bridge loan on a mixed-use development in Sunnyvale, Calif.

[via WSJ]

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