New York (HedgeCo.Net) – Jacksonville, Florida-based Advantage Capital Equity Solutions is set to unveil its new asset based lending hedge fund at the end of this month according to an article published in FINalternatives.
The Advantage Capital Equity Fund II will locate nonperforming assets and purchase them at a discounted rate such as real estate taken over by banks following foreclosures. Since the subprime fallout hit states like Florida and California the hardest, the fund will start focusing on those geographical areas initially.
“We see a bottoming of the real estate market six to 18 months out but that doesn’t really affect us,” said Bob Parsons, Senior Vice President. “As far as California and Florida are concerned, I live in Florida and we’re starting to see some stabilization in pricing in Jacksonville. There’s no bottom in sight yet for high-rise condos in south Florida but we don’t lend on high rises.”
ABL funds are gaining popularity, mostly because they tend to thrive in the current market conditions. Florida and California have record numbers of foreclosures and show no signs of slowing down anytime soon. The foreclosures left an array of opportunity for investors to purchase the properties far below face value. Other asset based lending hedge funds focus on providing loans to developers who are in a pinch and cannot get quick financing from a bank. The hedge funds then tack on high interest rates and build up their pool of capital. If the borrower fails to pay back the debt, the property is then seized by the hedge fund.
The hedge fund has a $100 million target. It follows the launch of their private equity fund, Advantage Capital Equity Fund I, which was launched in May. The firm is seeking a seed investor for the p.e. fund, hoping to raise $74 million.
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