REal Talk with Adam Perrotta-Tuesday

By Adam Perrotta, News Writer

--In the latest example of a firm looking to snap up debt in the wake of the credit crunch, Apollo Real Estate Advisors has pumped up funding for its debt investment fund to $930 million. The announcement comes on the heels of Investcorp establishing a $1 billion debt investment fund of their own earlier this month, as well as Inland American Real Estate Trust investing $100 million in another debt acquisition fund.

By making plays for debt now, these firms are looking to fill the gaps left by lenders stung by the credit crunch, who have limited the loan-to-value ratios on what they are willing to lend. The resultant gap is often filled with higher interest second mortgages. As the credit crunch continues, it's probably safe to assume we'll see more of these debt acquistion vehicles spring up. Of course, taking on such debts brings a good deal of risk, as has been clearly evident of late, and making sure that the borrowers, underlying assets and fundamentals are sound will be vital if these funds hope to avoid getting burned.