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Ex UBS Executive Sets up Shop

Real Estate Alert

A former UBS executive who thinks property prices are nearing a peak is launching an investment firm. James Bray Kelly aims to position the company, called JBK Capital, to take advantage of what he expects will be an increase in distressed opportunities as the real estate cycle turns down. The New York firm, which aims to invest up to $250 million, including debt, over two years, has a two-track strategy. In the near term, it will focus on properties in areas that are deemed to still have some room for price appreciation. "Some markets have underperformed," Kelly said. "Those are the markets we'll focus on in the short-term, where we think we can still find opportunities in the 8% yield range" before leverage.

But Kelly thinks that prices are at or near their peak in some markets and are poised to turn down before long. "This is a good time to start targeting distressed assets," he said. "For instance, where borrowers are having problems getting refinancing for their high-leverage loans. We think we'll start to see that one or two years out." The firm will target average leveraged yields of about 15%. It will look at properties of all major types, generally valued at less than $25 million, as well as distressed debt. The areas of focus will be New York, New Jersey, Connecticut and Florida. The amount of leverage used will likely range from 75% to 80%.

Kelly plans to team up on investments with capital partners - most likely banks or hedge funds. He is in talks with several players. At UBS, Kelly was an executive director and deal manager of the real estate securitization group. He spent six years at the investment bank. Kelly previously was a commercial real estate consultant at KPMG.