Blumberg Capital Partners News » Blumberg to Market $1 Billion Fund

Blumberg to Market $1 Billion Fund

After running into some snags early this year, Blumberg Capital Partners is scheduled to kick off a roadshow next month aimed at raising $1 billion of equity for a fund that would invest in distressed assets.

Market players said that company founder Philip Blumberg will open talks with sovereign wealth funds and other foreign investors after Labor Day.

The equity goal seems ambitious, given the tough environment for raising capital. Few funds of that size have been launched this year. But Blumberg’s real estate investment management firm, which was formed in 1979, boasts on its Web site of having produced a 17% average annual return for its investors from 1992-2008.

While the fund doesn’t plan to use leverage, can invest in both debt and equity, it is expected to lean heavily toward debt initially, given the potential unleveraged returns and the sponsor’s relatively conservative return goal of 8-12%. The vehicle, called Blumberg Strategic Assets Fund, could invest in whole loans, commercial MBS and mortgages from failed CDOs. It would also look at distressed properties, take equity stakes in projects and invest in corporate debt.

The company, based in Coral Gables, Fla., began preliminary marketing last fall, but never started a formal campaign. One holdup was uncertainty about the eligibility of foreign players to participate inbailout programs by the U.S. government, such as TALF (the Term Asset-Backed Securities Loan Facility) and PPIP (the Public-Private Investment Program). The fund was subsequently modified so foreign investors could participate via an off-shore entity.

The vehicle will charge a 1.5% management fee. After limited partners receive an 8% preferred return, Blumberg is entitled to 80% of profits until it amasses 20% of cumulative profits. It then gets 20% of any additional profits.

Blumberg has operated property funds previously, but this is its first predominantly focused on debt.