Faes’ new fund for ‘fix-and-flip’ entrepreneurs

Faes & Co, an investment company led by Christian Faes, has launched the Income Fund, a private credit fund focused on the US real estate bridging finance market, with a target raise of $100 million.

Investors will be a mix of high-net-worth individuals and institutions - the institutional money will come chiefly from family offices, according to a person familiar with the matter.

The sector involves loans to corporate entities that act in the ‘fix & flip’ space.

Faes has previous experience in the real estate bridging finance sector in Australia, the UK and Ireland. He has managed investment funds in the sector for 14 years.

Faes & Co’s statement announcing the launch of the Income Fund, an open-ended vehicle available to accredited investors, quoted Christian Faes as saying: “The US real estate bridging finance market has undergone a recent period of disruption, where traditional institutional funders have significantly slowed their appetite for a variety of reasons - from the securitization market being ‘less open’, to regional banks that have had a flight of deposits post the SVB crisis.”

In the US alone, the short-term mortgage market may be as large as $68 billion a year in originations, the statement said.

The withdrawal of traditional funders has made the asset class more attractive for alternative lenders, as it’s what Faes called a ”large and liquid market for building a diversified pool of asset-backed loans that provide a superior risk-adjusted return for investors.”

The return being offered is between 8.5%-10 percent per annum, said a source. The Income Fund is looking towards a very conservative profile of borrower and loan.

The fund will make use of the firm’s understanding of the short-term mortgage market to invest in loans originated by Faes & Co’s own group company, F2 Finance, which launched earlier this year.