The Company invests in subordinate real estate debt, including junior participations in mortgage loans, mezzanine loans, preferred equity, second mortgage loans, and other high-yielding real estate debt instruments. The Company seeks to select investments that offer the most attractive risk-adjusted returns.
The Company invests in real estate-related subordinate debt secured by a junior lien on a commercial property or a pledge of ownership interests in a real estate entity and other high yield, real estate-related fixed income investments.
The Company may also finance certain of the Company’s direct investments in subordinate real estate as part of a CDO issuance. This type of financing will enable the Company to match the funding of its assets and liabilities.
The Company monitors property-level performance of the collateral underlying its subordinate debt investments. The Company regularly reviews major tenant lease signings, renewals, expirations and modifications; changes in property management and management fees; changes in operating expenses; borrower's and sponsor's financial condition; distributions from leasing reserves and capital accounts; real estate market conditions; sales of comparable and competitive properties; occupancy and asking rents at competitive properties; and financial performance of major tenants.
The Company creates and manages portfolios of commercial real estate securities, which the Company finances by issuing CDOs. These securities include CMBS, fixed income securities issued by REITs and CDOs backed primarily by real estate securities. These securities are primarily investment-grade. By financing these securities with long-term debt through the issuance of CDOs, the Company expects to improve its equity returns and to match the term of its assets and liabilities. CDOs are a securitization structure whereby multiple classes of debt are issued to finance a portfolio of securities. Cash flow from the portfolio of securities is used to repay the CDO liabilities sequentially, in order of seniority.
Commercial mortgage-backed securities are backed by one or more loans secured by income-producing commercial properties. These properties primarily consist of office buildings, retail properties, apartment buildings, industrial properties, health care properties and hotels. The properties are primarily located in the United States, although CMBS backed by properties located in Europe, Asia and other countries are a growing segment of the market.
- Value Gap 
- Short-Term Growth
- Long-Term Growth 
- Long-Term Value 
