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ARE Asset's Kirsch

'After two years of sitting on the sidelines, we are getting back in the market because we believe the bottom is forming in first mortgages.'

By Erika Morphy | Updated on April 06, 2008

Nine months into the credit crisis, a number of investment managers are putting together funds to cherry-pick distressed loans. Miami-based ARE Asset Management is one of them. Jeffrey Kirsch, managing principal of the firm, has launched two offshore investment funds, both of which are registered here, with $600 million in committed funds in total. The goal is to invest in non-performing residential mortgages, purchased at a discount, which will be managed to either recovery or foreclosure. Newly originated, low-LTV hard money and bridge loans on commercial properties will also be targeted.What is interesting — for both his investors and the market at large — is that ARE has a long history of acquiring and liquidating non-performing residential first mortgages. The company got out of the market two years ago, though, when signs of an upcoming crash were apparent, at least to Kirsch. “We didn’t like what we saw,” he tells GlobeSt.com.Now, he says, “after two years of sitting on the sidelines, we are getting back in the market because we believe the bottom is forming in first mortgages.”

GlobeSt.com: Let’s start with the two funds. There is $300 million each committed for both. Is that levered or unlevered?

Kirsch: Unlevered, and we don’t have any plans to do so. That is why we are still in business.

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