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$100 million investment fund targets troubled Dallas-Fort Worth properties

With real estate financing drying up, a Dallas commercial property firm has created a $100 million fund to target problem properties.

Bradford Companies’ new opportunity fund hopes to acquire North Texas real estate that’s been impacted by the current credit crunch.

Rising interest rates and tighter underwriting by lenders has choked off financing for many commercial properties. Billions of dollars of loans that are maturing are challenged to obtain new debt.

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“The current high interest rate environment has lenders locked up and owners needing to trade out of assets with financing issues,” Bradford president and CEO Kevin J. Santaularia said in a statement. “Therein lies the opportunity for Bradford and our private investor partners.”

The Bradford Opportunity Fund II plans to acquire office and industrial projects throughout North Texas.

“We feel that the capitulation in the market will drive rare opportunities for local, nimble investors in this new era of asset valuation resets,” Santaularia said. “Our funds are designed to give high net-worth investors access to uncommon opportunities that are historically only accessible to the most in-the-know local real estate investors like Bradford.”

Bradford’s funds hope to purchase more than $100 million of commercial properties annually.

Santaularia said the fund is already working on two deals, including acquiring a 50% share of a Dallas office with a total project cost of $30 million.

“Office and industrial D-FW-wide is the dartboard – where our operational expertise can add value at new pricing thresholds,” he said.

The Dallas-based commercial real estate firm has been in business since 1989 and has previously invested in more than $250 million in properties. Bradford also manages more than 15 million square feet of D-FW properties for institutions, lenders and investors.

Bradford is just one of several commercial property firms setting up funds to take advantage of what’s expected to be a growing volume of troubled real estate during the next couple of years.

Nationwide, commercial property prices were down 8% from a year ago in March, according to a report from MSCI Real Assets. The annual decline was the largest since 2010.

D-FW office building purchases plunged by more than 80% in the first quarter due to tight credit and uncertainties about property values.

In the Dallas area, lenders are tracking a growing number of commercial property loans backed by billions in commercial mortgage-backed securities.

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