FT. LAUDERDALE, FL-Palm Beach Gardens-based Ram Realty and  New York City-based Square Mile Capital Management have formed a joint venture to acquire a portfolio of 38 non-performing loans with a total par value of approximately $150 million. The assets were acquired on behalf of affiliates of Ram Realty Partners II, and Square Mile Partners III.

The collateral for the loans includes 39 shopping centers in nine southern states representing a portfolio of 1.8 million square feet. The properties are in major and secondary markets in Florida, Tennessee, Georgia and the Carolinas. Ram currently owns and operates several assets in these markets. The notes were acquired at a significant discount to par.

Ram and Square Mile have jointly considered several distressed investments since early 2009, but this acquisition was the first one that the partners aggressively pursued, says Casey Cummings, president of Ram. “Our approach is to keep our focus on retail and multi-family and the markets we understand the best, which are Florida, Georgia, the Carolinas and Tennessee. We believe that these (debt) offerings tend to be very competitive, so we only focus in areas where we have a competitive advantage,” he says.

Ram’s existing portfolio, is made up of 60% shopping centers, 30% apartments and 10% mixed-use, says Cummings. Of the 39 assets in the pool of loans Ram and its joint-venture partner just purchased, all but one are retail properties, he says. The other pools which Ram and Square Mile Capital looked at had different asset classes, says Cummings.

Cummings says that he likes the fact that the new acquisition is made up of mostly retail properties in a region his company is familiar with because “we will wind up owning the majority of the assets.” Currently,  Ram and Square Mile Capital are in active litigation and discussions with existing borrowers, he says.

“Ram and Square Mile Capital have brought significant capital to this transaction,” says Cummings. “It is a true joint venture,” he says. The two entities have each contributed roughly 50% of the capital needed for the endeavor, says Cummings. Plus, the tasks associated with the joint venture have been divided up more or less equally.  “Square Mile Capital is focused on loan restructuring and enforcement actions, while Ram is focused on the property management functions,” among other tasks, he says.

“In the last 18 months, distressed debt investing has represented an overwhelming majority of our new transactions,” says Cummings. “The acquisition of commercial mortgages, on a selected basis, has been and will continue to be, a positive addition to our traditional acquisition and redevelopment programs.”

“We continue to have active dialogue with the larger regional and national banks regarding assets in the Southeast,” says Cummings. “It has been widely reported that there are tens of billions of loans in special servicing, many of which will be sold,“ he says.