Petra Fund REIT Corp—a Commercial Real Estate Investor Filed for Bankruptcy

October 21, 2010 / Elizabeth Buckley, Commercial Property Analyst

Commercial real estate investor Petra Fund REIT Corp, alongside its affiliate, Petra Offshore Fund LP has filed for bankruptcy protection in Manhattan, New York court under Chapter 11 on Thursday. According to the documents Petra Fund REIT and Petra Offshore Fund LP, the company listed up to $500 million in liabilities and $1 million to $10 million assets.

Petra Fund REIT Corp—a Commercial Real Estate Investor Filed for Bankruptcy

Petra Fund REIT, the commercial real estate investor filed for bankruptcy in accordance to its restructuring contract with a protected creditor.

The case was filed under Petra Fund REIT Corp., 10-15500, U.S. Bankruptcy Court, Southern District of New York, citing poor market conditions.

According to Vice President Lawrence Shelley from Petra Fund REIT, the commercial real estate investor, the company’s Chapter 11 filing is in accordance with its CDO or collateralized debt obligation, which will fund it real estate dealings.

Shelley also said that the CDO is a compilation of securities, which has a number of note-holders that are mainly important monetary and related organizations.

Petra, a commercial real estate investor owned by one of the stronghold of the commercial mortgage-backed securities market—Andy Stone. Mr. Stone started Petra Fund REIT and Petra Offshore Fund in 2005.

Fitch, a credit rating agency said regarding its report on the CDO, its newly updated methodology, just about 72.5 percent of the portfolio is formed to default, and Petra CRE CDO 2007-1, was issued as $1 billion in notes, and with a reinvestment stage of 6 years.

According to a Bloomberg news, the Chapter 11 filing follows a judgement one of the fund’s creditors— KBS Preferred Holding I LLC. KBS won against the commercial real estate investor to collect on its debt.

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