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By Michael Sasso
Oct. 11–TAMPA — A St. Petersburg investment company has scored $50 million from a subsidiary of Goldman Sachs to buy distressed commercial loans.
And with some financial experts warning of a wave of defaults coming, the company appears to have plenty of troubled debt to choose from.
Directed Capital is a St. Petersburg company that buys loans that are overdue, or in which the borrower may have failed to pay taxes or insurance. It focuses on loans worth $1 million to $10 million.
On Wednesday, the company announced that Goldman Sachs Bank USA, a unit of the Goldman Sachs Group, is giving it a line of credit of $50 million for its newest investment partnership. Directed Capital will couple that with $50 million of equity to give the investment partnership a combined $100 million, Chief Executive Officer Chris Moench said.
The company will use the money to buy distressed commercial loans around the country. Goldman Sachs Bank also is giving Directed Capital a separate $34 million loan that essentially will pay off an existing loan from Wells Fargo. It’s the biggest single infusion of financing in Directed Capital’s 11-year history, Moench said.A recent Mortgage Bankers Association report said there is nearly $2.4 trillion in outstanding commercial and multifamily mortgage debt in the United States. Many of those loans were made in the early and mid-2000s and are coming due in the next six years. How many borrowers won’t be able to refinance and will default on their loans is a major question, Moench said.
“It’s going to be very slow, and it’s a dance that’s going to play out over the next six years.”