Restructuring Veteran Identifies Dislocation in Commercial Real Estate Capital Markets and Launches Terra Strategies to Capitalize on Distressed Opportunities

Asset management firm leverages decade of distressed debt experience to invest in undervalued real estate via derivatives

NEW YORK, June 12, 2023 /PRNewswire/ -- Terra Strategies today announced its formation as an asset management firm focused on investing in undervalued property through derivatives. Launched earlier this year, the firm is capitalizing on the disconnect between real estate bond and equity valuations. Its differentiated three-pronged expertise across property operations, loan financing and loan restructurings, enables the firm to identify opportunities around quality real estate at significant discounts that are missed by over-generalizing and macro-assuming property or securities investors.

Terra Strategies is led by Managing Principal Shlomo Chopp and supported by a close-knit team of commercial real estate, finance and property operations executives. Chopp's career in commercial real estate spans more than 20 years and involves investments, operations, debt restructuring and proptech. In 2010, Chopp founded the distressed debt consulting firm Case Property Services, and in 2017 he developed the double-patented retailOS platform, a multi-channel ecosystem that blends e-commerce, retail and fulfillment. Together, Terra Strategies and its affiliates have acquired, managed and operated more than $2 billion of commercial real estate assets.

"After a long period of interest rate expansion, commercial real estate values are now resetting, creating a bevy of challenges for borrowers and lenders alike," said Chopp. "The current environment is similar to how legendary investor Sam Zell described the real estate market in 1975 in that it presents the opportunity for savvy, well-capitalized investors with management skills to acquire attractively-priced assets with favorably misaligned risk/reward ratios. We launched Terra Strategies for this purpose."

Terra Strategies' novel 'credit-to-property crossover' strategy connects discounted bond positions and real estate equity investments. Terra's investments may take various forms including that of well collateralized, high yielding CMBS tranches or trust control; the investment of loan modification capital while assuming title and at times retaining in-place low interest rates; or providing regional banks with liquidity that is swappable for defaulted loans. A further value-add comes in the form of Terra Strategies' experience owning and operating commercial real estate and track record of innovation ? an often-overlooked factor in a sector impacted by obsolescence.

Chopp continued, "In real estate and its securities, there are traders, lenders and operators. While a bond only increases its yield by reducing its purchase price (because the payments are fixed), a property increases its yield by generating more cash flow. Historically, operators have left massive dollars on the table by not recognizing that when a bond seller trades at a market-driven higher yield, an operator-investor can realize a substantial discount on their value-added bricks."

Terra Strategies' market opportunity is compelling, with more than $1 trillion of commercial real estate debt maturities projected to come due by 2025. As borrowers look to refinance, recapitalize or exit investments and lenders seek to offload commercial real estate debt at steep discounts, Terra Strategies is poised to capitalize on the market dislocation. The firm actively engages with bondholders, lenders, servicers and borrowers to identify the right entry point for even the same asset across the securities, debt and property markets to meet its strict investment criteria.

About Terra Strategies

Terra Strategies is as an asset management firm focused on investing in undervalued property through derivatives. The firm capitalizes on the disconnect between real estate bond and equity pricing and valuations. Its three-pronged differentiated expertise across property operations, loan financing and loan restructurings, enables Terra Strategies to identify opportunities around quality real estate at significant discounts that are disregarded and overlooked by over-generalizing and macro-assuming property or securities investors. For more information about Terra Strategies, please visit: https://www.terrastrats.com/

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SOURCE Terra Strategies