T
emasek, Singapore's sovereign wealth fund, has joined forces with CenterSquare Investment Management to launch a US$200m investment vehicle. This new fund will provide subordinate loans for commercial real estate projects, capitalizing on the current market landscape where borrowers are seeking "gap capital" due to rising interest rates.

    The initial investments will be made alongside CenterSquare's latest debt fund, focusing on pre-selected deals that align with their proven strategy of prioritizing multifamily properties. This approach allows them to adapt to market fluctuations while maintaining a disciplined investment approach.

    According to Michael Boxer, managing director of CenterSquare's private real estate debt vertical, the current higher-rate environment presents an attractive opportunity for investors seeking all-in returns. "Borrowers are struggling to secure mortgage loan proceeds at previous levels," he notes, "creating a gap that our fund is well-positioned to fill."

    Richard Gorsky, private real estate debt managing director at CenterSquare, echoes this sentiment: "This is one of the best times I've seen to invest in commercial real estate debt. The convergence of factors – including borrower capital stack reconstitution and resetting valuations – combined with favourable residential subsector fundamentals, makes for a compelling co-investment opportunity."