Cygnus Capital Reg D Fund Buys First Lien Note on Pennsylvania Hotel Property
Cygnus Property Fund V LLC, a Regulation D fund sponsored by Atlanta-based alternative asset manager Cygnus Capital Real Estate Advisors, has purchased a sub-performing note on a 97-room hotel located in Erie, Pennsylvania.
Cygnus Property Fund V LLC, a Regulation D fund sponsored by Atlanta-based alternative asset manager Cygnus Capital Real Estate Advisors, has purchased a sub-performing note on a 97-room hotel located in Erie, Pennsylvania.
Cygnus Property Fund V purchased a $1.2 million first lien note currently generating an 11 percent yield; the hotel was valued by the County of Erie at $2.1 million last year, the company said.
Cygnus invests in sub-performing senior, first position real estate notes, where the manager believes a near term catalyst exists to unlock value via a workout of a commercial mortgage, or a foreclosure and subsequent sale of the underlying commercial real estate. The targeted hold per investment is between 12 and 24 months.
Cygnus Property Fund V is available only to accredited investors and seeks to raise $20 million with a minimum investment of $25,000. The fund will close to new investors on May 1, 2020 unless extended.
“Cygnus Capital was founded in 2010 and has launched four prior investment programs focused on special situations and sub-performing real estate assets,” said Christopher Swann, founder and CEO at Cygnus Capital. “Cygnus Fund V is our first offering available to independent broker-dealers and registered investment advisors, with the objective of broadening our investment capabilities to new channels of investors.”
He added, “Cygnus Fund V is…focused on making $1-5 million investments, primarily without employing leverage, within the lower middle market US real estate debt space.”
Cygnus will hold the note and receive payments while continuing to work with the borrower to facilitate ongoing asset performance. Cygnus said that it has the option to restructure the note to support improved cash flows, or continue the foreclosure process and secure the underlying collateral.
Cygnus Capital has acquired more than 6,000 assets through 35 prior investments, and has made investments in 20 U.S. states.
