16D — November 19 - December 23, 2021 — Financial Digest — Lenders Directory — M id A tlantic Real Estate Journal
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L enders D irectory
ommercial real estate (CRE) recovered in a big way since the initial By Alexander Cohen, CEO of Liberty SBF As the CRE market remains hot, bridge lending becomes more competitive C
The lending market has seen an increase in cash flow and new players entering the field. Small business financing is expanding as investors seek capital, and a competitive mar- ketplace makes it the right time to pull the trigger on that new acquisition or potential busi- ness plan. For brokers and investors looking to expand their portfoli- os, they need financing options to make acquisitions happen. Bridge lending is a great way for sponsors to close deals quickly and allows for a flexible exit strategy. These short-term loans are also helpful for busi- nesses looking to transition to a longer-term financing arrange - ment, and bridge loans tend to have floating rates, another aspect of CRE that’s in high demand. Let’s take a look at how com- mercial property investors can utilize bridge loans to finance their business activities in a thriving market. Financing a renovation to build value Property values are solid these days and many inves- tors continue to add value through rehab or conversion. With the supply of real estate assets lower than demand, renovation looks to be a great
investment, and can also help increase occupancy. Bridge loans can be used to finance renovation proj- ects, even total gut jobs. Any sponsor that can demonstrate experience executing a similar business plan or show cash flow in a property will likely be eligible. That’s not to say that bridge loans are only for megadevel- opers. Some non-bank lenders are geared toward the middle market, with financing options in the $2-10 million range. Those lenders are also a great partner for brokers looking to find solutions for their clients in this range. Despite a forecasted interest rate increase over the next few months, CRE looks to maintain strong performance. A rise in rates is usually followed by decreased property value, but that does not appear to be the case given how strong the mar- ket looks right now. Utilizing a bridge loan to increase that value through a construction project looks like a strong play into 2022. Hedging inflation with multifamily properties Just as renovation is a com- mon use for a bridge loan, so too is acquiring a multifamily property. It’s a popular way
for CRE investors to hedge against inflation, which the Federal Reserve is projecting will be above target for four years. Multifamily properties are always in demand, typi- cally see increasing property values, and net absorption of apartment units just reached its strongest level in a decade, according to the National As- sociation of Realtors. In Washington, D.C., for example, the average asking rent price is up 8.7% year over year, and this asset type is among those that should remain strong into 2022. Mul- tifamily properties in second- ary markets should perform particularly well. If you are using a bridge loan for a multifamily property purchase, it may be categorized as either a “light lift” or “heavy lift” bridge loan depending on the loan amount and the use case. A multifamily light lift is typically $4 million or more, with non-recourse op- tions available, and up to 80% loan-to-cost (LTC) ratio with only 5% minimum debt yield. This type of loan also has the most competitive interest rates. A heavy lift bridge loan, on the other hand, usually starts around $2 million, doesn’t re- quire in-place cash flow, and with the space for enhanced services. “Unity Bank is a great com- munity partner, and we are delighted that they have further invested in our downtown by upgrading and moving into the newest retail space at CEN- TURION Union Center,” said Mayor Michele Delisfort . “We wish Unity Bank all the best as they continue to provide our residents with excellent banking services in their new location.” Unity and the Union Cham- ber co-hosted a well-attended ribbon-cutting ceremony at the new branch, which is located at 945 Stuyvesant Ave. at the intersection of Stuyvesant and Rosemont Aves. “We could not be happier to be a part of CENTURION because Landmark has created a beauti- ful facility in Union Center with a promising future,” said Unity Bank president & CEO James Hughes. “The bank is fortunate
up to half of the funding can be used for capital expenditures or construction costs with a 75% LTC ratio. Working with non-bank lenders can be beneficial Today’s competitive market has no shortage of options for financing, but using a non-bank lender may be smart for an investor, particularly because of the size of the loan offerings. Institutional lenders typical- ly work within a higher range for loan offerings, usually over $20 million, which shuts the door on mid-range investors. Conversely, some non-bank lenders operate in the $2-$10 million range, while also offer- ing non-recourse options and leverage up to 80% LTC/LTV. If you operate in the smaller- balance market, don’t let large financial institutions deter you with constricting financ - ing parameters. Alternative partners can help motivated investors get in on the action of a burgeoning market. Alexander Cohen is CEO of Liberty SBF, an experienced commercial real estate finance company. With a special ex- pertise in loan sizes $1-15 Million, Liberty SBF positions to address the needs of small businesses facing a challenging credit environment. MAREJ because the Union leadership and community have been very supportive of the bank since we first opened a location in the township in 1996. We look for- ward to welcoming our custom- ers and future customers into our new Union home.” CENTURION Union Center is a mixed-use development that is fueling the transfor- mation of Union Township’s re-imagined Union Center. Leasing is underway for the community’s second phase of residences, which features 75 luxury apartments and a full suite of amenities in a boutique four-story building. The new offering follows the comple- tion and successful lease-up of the community’s initial phase of residences, which are fully occupied. When completed, CENTURION Union Center will add 236 new homes and approximately 27,000 s/f of retail space housed in four buildings. MAREJ
depths of the C O V I D - 1 9 p a n d e m i c , f o l l o w i n g the general e c o n o m i c r e c o v e r y across most i ndus t r i e s . Demand re- mains high in
Alexander Cohen
the sector, and in some cases, has reached or exceeded pre- pandemic levels. According to the National Association of Realtors, the multifamily, industrial, and re- tail markets all saw occupancy increases in the third quarter; office was the only sector of commercial real estate to ex- perience a decline. In the Mid-Atlantic region, there’s plenty of action across all sectors of CRE. In Virginia, the industrial market is the hottest sector thanks to in- creased e-commerce activity and changing retail practices. The Virginia REALTORS’ third quarter report adds that Vir- ginia’s industrial vacancy rate was only 3% in Q3. Investors are motivated by low interest rates and the forecasted rise of inflation. UNION, NJ — Community and business leaders joined Uni- ty Bank and the Union Town- ship Chamber of Commerce to celebrate the bank’s new branch location at CENTURION Union Center. “We are excited to welcome Unity Bank to CENTURION Union Center,” said Manny Fernandez , founder of LAND- MARK , which developed the newmixed-use community. “Our goal has been to provide support- ive street-level retail that deliv- ers important community ser- vices to help shape Downtown Union and serve to enhance the resident experience. Unity Bank certainly fits that mold. Unity Bank has an established identity in Union Center and we congratulate them on their new home in CENTURION.” The bank’s Union branch was previously located across the street from CENTURION. The new 1,800 s/f branch provides a larger, contemporary facility
CENTURION Union Center, community leaders welcome new Unity Bank Branch location in Union Township, NJ
Shown from left: James Masterson, Union Chamber Executive Di- rector/CEO; Manuel Figueiredo, Union Township Committeeman; Chris Bono, Unity Commercial Loan Officer; Joseph Florio, Union Township Deputy Mayor; Michele Delisfort, Union Township Mayor; Manny Fernandez, LANDMARK Founder; George Boyan, Unity Chief Financial Officer; Ana Diaz, Unity Union Area Manager; Carolina Alvarez, Unity Retail Branch Administrator; John Kauchak, Unity Chief Operating Officer; and Janice Bolomey, Unity Director of Sales and Chief Administrative Officer.
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