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Distressed Funds Raised For Future Real Estate Acquisitions

Palisades Financial, a New Jersey investment company based in Englewood Cliffs, is raising $200 million for what it calls the “Opportunity Fund for Distressed Debt Buys.” Ira Bergstein, CFO and partner at the firm, says that while some see a gradual decline in the real estate markets, he foresees a much faster drop, followed by relatively quick defaults.

“The dentist who’s long (owns) three properties right now has no business being three properties long. That’s where the trouble will be,” Bergstein asserts. And, he believes, the banks left holding the actual real estate will want it off their balance sheets quickly and will unload it at steep discounts.

Another firm not waiting for the big real estate correction is GE Commercial Finance Real Estate. They’ve just dropped $135 million into a fund run by Denholtz Associates. That fund is looking to buy $600 million worth of “problem” assets over the next two years, according to Steven Denholtz, managing partner for the Rahway, NJ-based development company.