Canadian Mortgage Fund Suspends Payments Amid Liquidity Crisis

(Bloomberg) — Canadian real estate lender Romspen Investment has suspended the redemption of its largest fund after many borrowers stopped paying.

The Toronto-based company said in a letter to investors dated Nov. 8 that it will hold out redemption requests until it becomes clearer when borrowers will repay loans and the fund will be able to obtain cash from asset sales. “Temporarily defer payments” for “

The Romspen Mortgage Investment Fund has invested C$2.8 billion ($2.1 billion) in 134 mortgages at the end of June, split roughly evenly between projects in Canada and the United States.

Backed by New York-based TIG Advisors, Romspen is an established professional manager of private mortgage funds, providing predevelopment, construction and other loans for commercial and residential projects. It is one of Canada’s largest private players in its business.

In a letter signed by the eight trustees, Romspen said, “We are working diligently to expedite many of these portfolio transactions and remain confident in the underlying value of the fund’s assets. “However, often such transactions involve adjusting the interests of a number of independent third parties who are also subject to current market uncertainties. will be

The US real estate market has been disrupted by aggressive interest rate hikes this year and rising commercial vacancies in some cities, including Toronto. Romspen has scaled back the deal as a result, managing partner Derek Jenkin told Bloomberg last month.

To maintain liquidity, the company has created a “run-off pool” for investors who want to make money when their assets are sold. But that didn’t dampen reimbursement demands, according to the letter, which said the company could take further action if the situation worsened.

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