Alex Frew McMillan

Sag Harbor Capital Management is preparing its second mortgage-backed hedge fund. The W Financial II, which is due to launch in June, will focus on bridge loans for commercial real estate projects and mezzanine loans.

Portfolio manager Gregg Winter says he will have a bias to first mortgages. His other company, Winter & Co, is a commercial mortgage brokerage that will help source loans to the fund.

Winter notes the original W Financial, which has a four-year track record and has produced a compound annual return of 11.3%, has $25 million in assets under management. In mid-April, the fund completed a $10 million bridge loan for a New York developer.

Winter also notes that the company is getting better at what it does.

“We have ramped up our infrastructure and improved our ability to source and underwrite promising loan opportunities,” he wrote in an email.

The W Financial II is expected to charge an annual 2% fee and a 20% performance fee, whereas the first fund charges 1% and 25%. There will be no lockup for the second fund, but redemptions would require six months notice. The minimum investment for the new fund is $1 million.

Like the first fund, the auditor is expected to be Marcum & Kliegman, with Stephen Smith & Co as the accounting firm and Herrick Feinstein as the law firm.

Sag Harbor Capital is the managing member for the fund, with Winter and partner Marc Bailin as its principals. Sag Habor Capital and Winter & Co are both based in New York.