Stockdale launches debt platform targeting $15M to $75M distressed loans

After three decades buying real estate equity, Stockdale Capital Partners — a Los Angeles lender and owner with $3 billion in assets under management — is launching a platform to make senior bridge and mezzanine loans, buy notes and take special-situation positions nationwide against the property types most lenders would rather not finance, Bisnow first reported.

The strategy grew out of Stockdale's own trouble as a borrower: over the past few years the firm searched for loans under $50 million against struggling asset types and found no lenders willing to make them, according to Bisnow, even as it fielded a rising number of requests from other owners seeking similar debt. Managing partner Dan Michaels, who works on the firm's investing and fundraising strategy, said the conclusion followed from the search itself: if Stockdale could not find the capital its own buildings needed, it was not going to be the only US owner in that position. The loans the new platform intends to write run from $15 million to $75 million against office, life sciences and hotel, asset classes where Michaels said the company sees limited liquidity. Stockdale has done the occasional debt deal over its 30-year life, including buying loans after the Global Financial Crisis, but its business has been equity-first until now.

The first hire is Alec Maki, who joined this summer as a senior vice president from the debt originations desk at Fortress Investment Group, and Stockdale expects him to be the first of a few dozen people on a strategy with an initial target of $300 million of deployment over the next 12 months.

Michaels's timing case rests on what the largest credit managers have stopped doing: many lenders are steering away from flexible debt and special situations amid elevated interest rates and global uncertainty, he said, and the biggest shops, among them Fortress and Apollo, have drifted toward what he described as traditional flow business and larger dollar volumes. Rates sitting well above early-cycle levels is the backdrop he cites for that retreat, and the result, in his account, is a shortage of active special-situation lenders below a certain loan size, which is the space Stockdale says it wants to occupy.

Fortress is not absent from the dislocation, only from this end of it, on Michaels's telling: David Hammerman has argued that reset values reward investors who can hold past a fund's mandate, and its real estate equity head has said San Francisco multifamily was bought at roughly half of pre-COVID pricing. Special situations below a certain loan size are a different business from that one.

The band Stockdale will lend in is wider than the hole that produced it: it went shopping for loans under $50 million and will now write as much as $75 million, half again as high, which suggests the platform was sized for originators who intend to see more of the market than the deals that started the exercise. The product menu is broader still, and it is not uniform in risk: senior bridge debt sits closest to the top of the stack, mezzanine fills the space between a first mortgage and the equity beneath it, and note purchases are a different trade, where the return is set by the price paid for an existing loan. Bisnow's report does not give pricing on any of it.

This publication has argued that the refinancing wall is being rolled rather than repriced, and that what clears is collateral with visible income; a platform that raises money for mezzanine and note purchases against office, life sciences and hotel takes part of its risk on the other side of that line, because these are the asset classes where current cash flow is least settled. Private credit has moved into financing the stretch before income arrives, with HPS, Dwight and Mesa West underwriting the window between funding and lease-up, and whether the risk in that window was priced correctly tends to become clear only when a borrower asks for an extension.

The argument for building it anyway is deal flow: a credit book is a pipeline before it is a franchise, because the loans reach assets before the rest of the market does, and a firm that both owns and lends gets two looks at the same building. The owning side is still transacting: Inova bought the Willow Oaks medical campus in Fairfax from Stockdale for $97.5 million on September 28, a two-building, 382,850-square-foot property next to Inova's headquarters and hospital, with Newmark arranging the sale.

Fixed costs arrive before revenue: a few dozen hires is a payroll built for a platform several times the size of the first-year deployment goal, and the opening hire came out of an originations desk, the natural first addition for a lender with no book yet. That suggests Stockdale expects the platform to scale well beyond $300 million, or expects the loans to serve as sourcing for the equity side.

The mix inside the first $300 million matters more than the headline number. Senior bridge loans against properties already producing rent would make this a spread business with a legible downside case; mezzanine and note purchases in office and life sciences would mean underwriting the gap between a property's current cash flow and the cash flow it is meant to produce, with the answer arriving when the first extension request lands.