By Anna-Marie Beal
Cottonwood Group, a Los Angeles-based real estate private equity manager, is seeking to expand its real estate debt investment and asset management capabilities.
Mark Green, chief investment officer, told PERE Credit the firm is looking at options that include underwriting, asset management and capital formation specialists. As part of this push, the firm will also work to increase its use of data analytics and external advisers.
The firm is seeking to growth both AuM and diversify its portfolio across capital structure and geography.
“Over the next 18 to 24 months, we are targeting a 30–40% growth in portfolio size, driven primarily by continued dislocation in the capital markets and increased borrower demand for flexible, non-bank financing solutions. We are also actively expanding our LP base globally to support this growth,” Green added.
The firm is actively originating and structuring senior loans, mezzanine debt and preferred equity positions, with recent deals that include a $284 million senior bridge financing package to recapitalize a mixed-use development and condominium project in Austin, Texas. It has geographic concentrations in markets in Texas, South Florida, California, the Northeast and select cities in the Sunbelt and Mountain West.
“[We are] particularly interested in those that have strong fundamentals, but are navigating dislocation or capital stack complexity,” Green added. “Our broader goal is to be a first-call capital partner for complex or capital-constrained situations – someone who can step in early, navigate uncertainty, and deliver creative solutions where others see friction.”
Cottonwood is bullish on opportunities in residential conversions, especially office-to-multifamily in undersupplied urban areas, ground-up development and value-added plays. Meanwhile, industrial and specialized logistics near ports, with an emphasis on pre-development and infill sites, and select, urban hospitality repositioning with a strong brand are part of its purview, noted Green.
“As we continue to scale the platform, we’re selectively adding senior talent across both the investment and asset management functions. On the investment side, we’re focused on individuals who bring deep sourcing relationships, a strong credit background, and experience navigating complex capital structures and special situations,” Green said. “We’re particularly interested in those who have worked across multiple product types and can contribute to thematic sourcing aligned with our opportunistic approach.”
A time to grow
There is a confluence of factors that today make a good time to deploy capital, with Green citing the potential for the compelling vintage for investment in more than 10 years.
“We’re seeing structurally higher base rates, wider credit spreads, tighter loan covenants and opportunities to step into the capital stack with real downside protection,” Green said. “In some instances, we’re lending at discounts to replacement cost and beneath prior equity basis, and still seeing borrowers commit significant skin in the game. Add to that the fact that many traditional lenders are sidelined or de-risking, and it’s clear this is a lender’s market for those with capital and conviction.”
Sentiment has evolved from survival mode to more of a calculated endurance game, Green added. The commercial real estate market’s oft-repeated mantra of “Stay Alive ‘Til ’25” has been replaced by a new slogan, “Stay in the mix till ’26” as macroeconomic and geopolitical turmoil has upended what was widely expected to be a near-term recovery.
The latter slogan captures the current market psychology well, Green added.
“Allocators are cautious, not frozen. Most groups are managing existing exposures, opportunistically deploying into credit, and waiting for conviction to return on equity,” he said. “The market is waking up to the reality that the zero-rate era is gone. That shift will recalibrate how value is created, with operational execution and capital efficiency taking center stage over financial engineering.”
Despite the turmoil, Cottonwood is pressing ahead with expansion plans.
“We view this as an environment where selective action beats complacency. It’s not about swinging for the fences. It’s about staying nimble, preserving optionality and capturing basis resets when dislocation presents itself,” Green said. “The bid-ask gap is narrowing in some places, but this remains a hand-to-hand combat market. Those who stay engaged and underwrite rigorously –rather than waiting for perfect clarity – are best positioned to shape the next cycle.”