Hudson doubles up in 2004.

Hudson Realty Capital LLC (HRC), the sponsor of two high-yield real estate funds, closed more than $240 million in transactions during 2004, roughly double its activity in the previous year, announced Spencer Garfield, managing director.

The company, which is the sponsor of the Hudson Debt Fund I LLC and the Hudson Opportunity Fund I LLC, officially commenced operations at the start of 2003 and closed the year with more than $120 million in debt, subordinate debt, whole loan purchases and equity transactions.

In recognition of its success, the company gathered approximately 50 of its investors recently from around the U.S. for an overview of the real estate markets and its own fund's performance. The conference featured presentations by Garfield and HRC Founding Principals Sanford Herrick, David Loo and Richard Ortiz.

The Hudson Debt Fund I LLC, which makes high-yield bridge and mezzanine loans, registered $90 million in activity during 2004 while the Hudson Opportunity Fund, which invests directly in real estate and acquires underperforming mortgages, on a leveraged basis, invested in approximately $150 million in real estate assets.

Building on this momentum, HRC is finalizing plans to introduce a third, hybrid debt and equity fund during the first quarter of 2005. The new fund will be larger than both of its previous funds combined.

"The fact that we negotiated and closed approximately $50 million in transactions during the month of December underscores one of our greatest strengths," Garfield noted.

"We offer our clients rapid turnaround and surety of execution, particularly on complex value-added transactions.

"This core capability is at the heart of the company's success, enabling our borrowers to capitalize on a variety of real estate opportunities," explained Garfield.

HRC is a dominant player in the under-$25 million high-yield loan arena, an area that is under-serviced according to Garfield.

"Billions of dollars of opportunity funds chase the larger transactions, leaving a gap in the market for an entity like HRC to meet the financing needs of borrowers at the $25 million level," he said. "With the likelihood of a continued rise in interest rates, and conventional lenders tightening their criteria, we expect increasing opportunities for HRC to deploy capital in the next several years."

Hudson's investment strategy is diverse, with the majority of funds invested in high-growth residential markets with high barriers to entry.

Looking ahead to 2005, the professionals at HRC expect to adopt a more disciplined risk management process when evaluating new investments in light of gradually rising interest rates.