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Axar Capital Acquiring Majority Stake in Terra Capital Partners

New Partner Will Expand Terra Capital's CRE Lending Capabilities
February 20, 2018
Rendering for 405 E. 4th Ave. in San Mateo, CA, the latest project financed by Terra Capital Partners


Terra Capital Partners, a New York City based real estate finance firm, has entered into an investment and partnership agreement with Axar Capital Management LP.

The amount of the investment was not disclosed but is expected to enable Terra to broaden its investment mandate beyond its core focus on providing CRE mezzanine and bridge loans.

Axar Capital is acquiring a 65.7% economic and voting interest in Terra Capital Partners, as well as a 49% economic interest in each Terra 5 Manager and Terra Income Advisors.

Terra, which specializes in mezzanine finance and manages funds on behalf of individual investors, has financed more than 300 properties of all types nationwide. The firm has deployed $2 billion of capital over a 15-year history. Currently, Terra has $450 million of discretionary capital under management.

"Axar's investment acumen across the real estate capital structure, combined with Terra's hands-on real estate credit experience, will enhance our ability to originate and manage assets," said Bruce Batkin, Terra's co-founder and CEO.

Batkin will remain CEO; and co-founder, Simon Mildé, will become vice chairman. Vik Uppal, Axar's head of real estate, will join Terra full time as chief investment officer and a member of the board.

Prior to Axar, Uppal was a managing director on the investment team at Fortress Investment Group's credit and real estate funds and co-head of North American Real Estate Investments at Mount Kellett Capital Management.

The CenterCap Group LLC and Clifford Chance LLP advised Terra. Kirkland & Ellis LLP advised Axar.

Last month, Terra Capital Partners closed on an $8.9 million mezzanine loan to finance the completion of a 32,931-square-foot residential redevelopment project in Chelsea. The redevelopment project is sponsored by a joint venture between Manhattan-based Delshah Capital and OTL Enterprises. Eastern Consolidated arranged the financing for the senior and mezzanine loans, with first mortgage financing provided by CapitalSource.

It also closed on a $22.5 million preferred equity investment to finance the construction of a mixed-use building in San Mateo, CA that will contain approximately 62,000 square feet of pre-leased office space and 15 multifamily residential apartments. The sponsor is Windy Hill Property Ventures, a locally-based developer/operator of multifamily and office real estate. The first mortgage construction financing was provided by Bank of the Ozarks, and all financing was arranged by Cushman and Wakefield.

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