Hayden fund raises $60 million for vulture real estate deals

Hayden Real Estate Fund 1 LP, Conshohocken, says it's raised $60 million from Philadelphia Consolidated Holding Corp. founder James J. Maguire and other private investors to buy buildings at today's depressed prices.

"The opportunity is going to drive it," said founder J. Anthony Hayden, a veteran Philadelphia real estate broker (Cushman & Wakefield, Beacon Commercial) turned investor. "We'll do the suburbs, Lehigh Valley, Harrisburg, Philadelphia, we'll do something downtown."

The Hayden fund plans to buy "underperforming office, flex and industrial real estate to be improved, repositioned, managed, and ultimately sold or refinanced." However, its first acquisition wasn't "distressed," Hayden told me: It's two buildings, totalling 67,000 square feet, in Whitelands Business Park, Exton, which Hayden bought from Brandywine Real Estate Trust for between $9 and $10 million earlier this year. A recent lease to Crump Group Inc. has boosted occupancy to 91% from the previous 85%, Hayden says.

Hayden's a cousin of developers Brian and Michael O'Neill, and the Philadelphia region's prolific Wolfington family, among others. He's counted Maguire as a client for the past decade. Until last year, Hayden says, "I was doing one-off deals, put a property under contract, scramble around and raise the equity. That business went away about a year ago," when bank credit markets tightened - right around the time Maguire sold its interest in Philadelphia Consolidated to Japanese insurer Tokio Marine Holdings Inc. for $800 million in cash.

Like other real estate pros, Hayden says deals have become scarce because sellers are reluctant or can't afford to cut prices to the level buyers demand. "The seller's never going to come down to the numbers that we want," Hayden told me. "But the lenders, all they want to do is get it off their books. We strongly believe there will be opportunities presented by these lenders who want it off tehir books before the end of the year."

REITs aren't buying. Neither are public pension funds, which "were burnt badly" by the real estate collapse, though "we're talking to a couple of corporate pension funds."