The Treasury Department tapped nine fund managers, including five mutual fund companies as well as private equity and hedge funds, to help implement its Public-Private Investment Program, established to address legacy real estate assets.
The general partners are expected to commit a minimum of $20 million to new funds set up for program, required to be at least $500 million in size. The fund managers will have roughly three months to raise the capital, with the Treasury making matching commitments. The Treasury will also provide long-term financing alongside individual investments, allowing managers to leverage the investments with as much as 50% debt.
The underlying goal of the program is to create a market for the mortgage-backed securities that are contaminating the financial institution balance sheets.
AllianceBernstein; Angelo, Gordon & Co. and GE Capital Real Estate; BlackRock Inc.; Invesco Ltd.; Marathon Asset Management; Oaktree Capital Management; RLJ Western Asset Management; The TCW Group; and Wellington Management Co. were all selected as fund managers in what the Treasury termed “the initial round” of the program. Over 100 institutions applied to participate. PIMCO, however, dropped out, citing uncertainty over the how the program would be managed.