Carroll Launches New Distressed Financing Platform With $250M Investment

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Carroll, an Atlanta-based real estate investment firm, has launched a new platform called Carroll Credit that will provide rescue capital to multifamily owners and developers with distressed properties, Commercial Observer can first report. 

Carroll Credit is joining with institutional investment partners to make $250 million in structured capital available to companies faced with financing issues, primarily in the Sun Belt. 

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“This is the first time in my career that I’ve seen the debt markets freeze up and cap rates expand so fast,” Patrick Carroll, founder of Carroll, said. “Valuations are down, and there’s a lot of people borrowing from debt funds with short-term bridge debt. It’s pretty obvious that when the loans come mature, they’re going to be underwater, and someone has to step up and help pay down their debt or refinance their debt. “

A multifamily portfolio in the Sun Belt seems like a good bet even in a time of market volatility. However, when things go south, it’s mostly due to trouble with capitalization instead of fundamentals, according to Carroll. “Cap rates have expanded so wide. And a lot of people have floating-rate interest loans. Even though the property is doing very well, good real estate never fails for things other than leverage” he said. 

The preferred equity business is launching as a separate entity but will leverage Carroll’s operating platform to manage the properties it invests in. Carroll Credit is raising equity from both new and existing investors, including institutional investment partners and family offices, with up to 20 percent of the initial capitalization coming directly from Patrick Carroll. With asset dispositions totaling $2.2 billion through the third quarter of 2022, the firm has acquired assets totaling $1.3 billion.

Emily Fu can be reached at efu@commercialobserver.com.