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LOS ANGELES-Expanding on its current businesses, CB Richard Ellis has joined with LJ Melody & Co., a CBRE wholly owned subsidiary, to form CBRE Realty Finance, Inc. The specialty finance firm will focus on originating, acquiring, investing in, financing and managing a diversified portfolio of commercial real estate-related loans and securities.
According to CBRE Realty Finance CEO and president Keith Gollenberg, CBRE already operates CBRE Investors on the equity side so CBRE Realty Finance is a compliment to that on the permanent fixed-income side. "It's a piece missing from the CBRE line-up and a logical piece to fill," he says.
Initially, the new company will focus on the US, Gollenberg adds, and it will enter the international arena in a year or two using CBRE's international resources. With an eye toward all property types, the new unit has several deals on the table and Gollenberg expects to close the first transaction within the next few weeks.
Gollenberg previously led Cigna Investment Management's Capital Markets Group and joined LJ Melody as a managing director in 2004. Ray Wirta, vice chairman of CB Richard Ellis Group, Inc., will also serve as chairman of the board of CBRE Realty Finance, Inc.
CBRE Realty Finance has raised gross proceeds of $300 million through the sale in a private placement of 20 million shares of common stock to institutional and accredited investors. CB Richard Ellis Group, Inc. has an approximately 5% initial equity stake.
According to a company release, "its strategy is to generate a diversified portfolio of commercial real estate investments and to leverage these investments to produce attractive risk-adjusted returns. It will invest in existing debt securities, such as CMBS instruments and mezzanine debt, and directly originate new whole loans and preferred equity investments across all, or any part of, the capital structure.
"CBRE Realty Finance has unique strengths derived from CB Richard Ellis' local market intelligence, LJ Melody's access to origination channels, and our senior executive team's proven ability to create investment concepts and extensive experience in originating, structuring and financing commercial real estate financial products. This powerful combination will help make us a leader in developing innovative solutions for borrowers and sellers," Gollenberg adds.
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