With $1.2 billion of deployable capital, Waterfall Asset Management managing director Patti Unti is turning the New York firm’s attention to distressed debt.
In a market where borrowers with low-interest-rate loans are challenged to line up refinancing, Waterfall, a global alternative investment adviser, held final closing this month of its closed-end real estate fund, Waterfall Atlas Fund, raising a total of $485 million.
The fund intends to build on Waterfall’s experience with investing in the commercial real estate space through loans and commercial mortgage-backed security bonds.
Regarding the opportunity set for the strategy, Unti said the firm is well-positioned to capitalize on ongoing dislocations in the market.
“Through the Atlas fund strategy, my team and I have taken an opportunistic investment approach with a focus on distressed debt situations that primarily materialize through maturity defaults,” Unti told CoStar News in an email. “We intend to be solution providers, by opportunistically providing liquidity during the ongoing dislocation on the market — which is mainly created through the combination of increasing interest rates, regulations and a tightening credit market.”
Unti has more than 25 years of experience in finance. She's worked with Waterfall for nearly a dozen years. Before that, she held executive positions at Ventras Capital Advisors, Capmark Investments and Heller Financial.
She said Waterfall expects pressure from rising rates and a tightening credit environment to have a direct impact on commercial real estate, especially as it relates to the ability to refinance near-term maturities.
“We believe that commercial real estate debt maturities can continue to create distress situations that may provide opportunities for the CRE equity strategy to acquire assets from troubled borrowers or inject rescue capital,” Unti said.
Waterfall initially launched its commercial real estate equity strategy in 2017, led by Unti and Zachary Liebmann, and has invested $500 million across 33 assets. So far, Waterfall has deployed $172 million of the Waterfall Atlas Fund capital across 18 assets.