Recently formed Wilshire Finance Partners is raising money for a high-yield-debt fund with an unusual fee structure. The vehicle, Wilshire Income Fund, is aiming to gather $100 million that it would use mainly to write bridge loans on transitional properties in California.
Like most funds of its kind, it will charge an annual management fee equal to 1% of assets. But the entity won?t collect an incentive fee. Instead, Wilshire will seek to make money for itself through its management charge and origination fees on its loans. Incentive fees on funds like Wilshire?s are typically 20% of gains.
In addition to transitional-property financing, Wilshire?s vehicle will aim to originate whole and mezzanine loans on a mix of properties in California. It may also buy some loans. The firm hopes to have its equity invested within two years, focusing on investments of up to $5 million each. The goal is to produce a rate of return of 9-12%. With leverage, the vehicle would have close to $300 million of buying power.
Los Angeles-based Wilshire was formed at the beginning of this year by Kevin DeMeritt and Thom OBryon, who have worked together in various capacities since 2002. Market players say DeMeritt and OBryon are each kicking in $1 million of equity for the firm?s fund. The remainder will come from wealthy individuals and institutional investors, including funds of funds.
By Harrison Scott Publications Inc. Real Estate Alert (REAlert.com)
