Michael Dell-Affiliated Merchant Bank Raises $3.2B For Real Estate Credit Fund

Merchant bank BDT & MSD Partners raised $3.2B for a new real estate credit fund, MSD Real Estate Credit Opportunity Fund II, Bloomberg reports.

The move comes while financing options for the commercial real estate industry are limited, as conventional lenders have pulled back.

Among other contributors to the MSD fund are the merchant bank's employees as well as Dell Technologies founder Michael Dell, who together have put in $600M, according to Bloomberg, citing anonymous sources.

MSD has already deployed about 40% of the fund on transactions that included a $110M loan collateralized by Esperante Corporate Center in Florida and a $140M loan collateralized by a hotel in Utah, Bloomberg reported.

Total outstanding commercial and multifamily mortgage debt rose to $4.63T at the end of the third quarter, the Mortgage Bankers Association reported earlier in December. Even so, there has been a drop in borrowing.

“The level of commercial mortgage debt outstanding has continued to increase despite a continued pullback in borrowing,” Jamie Woodwell, MBA’s head of commercial real estate research, said in a statement.

“A decline in sales transaction and refinance volumes has meant less new debt being extended, but it also means that fewer loans are paying off than in many earlier periods,” Woodwell said. “The result is that debt levels continue to rise, but at a pace that is roughly half of what was seen last year.”

BDT & MSD Partners was formed this year by the merger of BDT & Co., a merchant bank founded in 2009 by billionaire Byron Trott, and MSD Partners, a firm that invests on behalf of Dell, his family and others.

CORRECTION, DEC. 21, 2023, 11:30 A.M., ET: This story has been updated to clarify Michael Dell's connection to BDT & MSD Partners.