Firms See Opportunity in Distressed Debt Market
Dalton Investments, an SEC-registered investment manager for institutional and private clients, is offering a new distressed mortgage strategy that will buy defaulted loans from mortgage servicing companies at significant discounts and restructure them, providing affordable monthly payments for homeowners and a residential mortgage and real estate investment vehicle for Dalton's clients.
The new strategy is a joint venture with Beach Front Property Management of Long Beach, Calif. Steven Persky, co-founder and CEO of Dalton Investments, and Kyle Kazan, president of Beach Front Property Management, will manage the venture. Beach Front Property Management currently manages more than 2,000 single-family homes and apartment units in California.
"This new strategy will combine Dalton's expertise in distressed debt and Beach Front Property Management's experience in buying and restructuring troubled real estate assets," Mr. Persky said in a news release. "The subprime market is just beginning to unwind and we expect defaults and foreclosures to skyrocket over the next six to 12 months."
Mr. Kazan said the strategy will build on an existing management platform and will only invest in mortgages after doing a thorough analysis of underlying assets.
"There will be tremendous opportunity for buying loans at significant discounts and turning them into profitable investments while allowing homeowners to stay in their homes with more affordable monthly payments," he added.
The joint venture will initially focus on buying mortgages in Southern California, Las Vegas and Phoenix markets where easy credit and investor speculation have led to the current bubble, despite excellent long-term prospects for real estate development.
Beach Front Property Management was founded in 1999 to provide third-party management to the firm's growing real estate investment company, Beach Front Properties. That firm specializes in managing and rehabilitating distressed homes and apartments in Southern California.
Dalton Investments currently has $1.3 billion in assets under management and serves institutional and private clients.
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