Hotel Debt
LibreMax, the $2.7 billion investment firm founded by former Deutsche Bank AG trader Greg Lippmann, is investing in hotel debt, according to two people with knowledge of the strategy, who asked not to be identified because the loans are private.
Lippmann, who gained fame by betting against subprime- mortgage bonds before housing collapsed, has made commercial- real estate a key part of his firm’s strategy as the markets recovered.
Hotel values, which decline fastest during an economic downturn, can rebound rapidly as room rates are reset on a daily basis. Prices on hotels surged 17 percent in 2013, according to a preliminary reading of the Moody’s/RCA Commercial Property Price Index.
The New York-based firm had more than 25 percent of its assets invested in commercial real estate at the end of December, according to a letter to investors, which showed the fund gaining 12.9 percent last year. Lippmann declined to comment on the investments.
Weinstein’s Saba
Boaz Weinstein’s Saba, a $3.9 billion investment firm started in 2009 to trade on price discrepancies between loans, bonds and derivatives, moved into mezzanine real estate lending last year, according to people with knowledge of the fund, who also asked not to be named.
The investment ties into a broader property bet for Weinstein, the former co-head of global credit trading at Deutsche Bank. His firm was one of the first hedge funds to start digging into the riskiest corners of the $550 billion commercial mortgage bond market last year by purchasing securities that are first in line to take losses from new deals.
Investment in commercial real estate debt is increasing as sales of securities linked to properties ranging from mobile home parks to Hawaiian resorts are poised to climb to $100 billion this year after doubling to $80 billion in 2013, according to data compiled by Bloomberg.
Singer’s Management