- Mavik Capital seeks $1B for its VS3 fund to acquire distressed US commercial real estate assets amid market dislocation.
- The firm, led by CEO Vik Uppal, points to ongoing valuation stress driven by high borrowing costs still impacting office and multifamily assets.
- Institutional capital—Starwood, private equity—is piling into the space, underscoring the scale of distress and the broader reset in commercial property values.
Distress Defines the Opportunity
Mavik Capital Management is capitalizing on ongoing distress in the US commercial real estate market by launching a new $1B fund, Bloomberg reports. The VS3 fund will target assets battered by a multi-year jump in borrowing costs that began with the Federal Reserve’s rate hikes in 2022. While headlines have focused on high-profile property defaults, the less visible reality is a market-wide demand for capital to restructure and recapitalize owners—an environment Mavik’s CEO Vik Uppal calls “an extremely compelling opportunity set.”
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
The Details
VS3 will take an opportunistic approach across multiple asset classes. The fund can invest in physical real estate and commercial mortgage-backed securities. Mavik’s previous funds, VS1 and VS2, targeted similar market dislocations. They backed deals ranging from specialty mines to adaptive reuse projects. Those investments included what is now Washington, DC’s largest office-to-residential conversion. Uppal said VS3 will avoid artificial intelligence-related assets. He cited stretched valuations across the sector.
Surging Rates Expose Market Weaknesses
US commercial real estate values remain under pressure, with stress especially acute in office and multifamily properties. According to Bloomberg, the Federal Reserve’s 2022 rate hikes—4.25 percentage points in a single year—triggered a sharp repricing, trapping owners who acquired assets when debt was cheap but now face refinancings at much higher rates. The number of sellers unwilling to recognize losses has led to capital being stranded in assets, adding to the pipeline of distressed opportunities for well-funded buyers.
Why It Matters
Institutional investors continue targeting distressed CRE opportunities across the US market. Starwood Capital recently closed a $10B opportunistic fund pursuing similar strategies. The move reflects expectations for more recapitalizations, debt workouts, and forced sales. Mavik is positioning itself to capture that growing opportunity set.
The prolonged downturn remains significant for CRE professionals. According to Green Street’s 2026 data, property values remain down double digits from 2021 peaks. Transaction volumes also remain below pre-pandemic levels. Mavik’s flexible strategy spans both real estate assets and debt investments. The growing pool of distress capital could accelerate price discovery across property sectors.
What’s Next
Mavik is in the early stages of fundraising for VS3. The firm will likely deploy capital over several years as refinancing deadlines approach. Higher refinancing pressure could force more assets to market. Other major funds, including Starwood’s $10B vehicle, are already active. Competition for distressed deals could intensify in the coming quarters. At the same time, worsening market stress could expand deal flow. Investors will watch whether this capital accelerates price discovery. Another possibility is that it extends lifelines to struggling owners awaiting a recovery.
