12A — June 12 - 25, 2020 — Creative Financing — Financial Digest — M id A tlantic Real Estate Journal
www.marej.com
C reative F inancing Summit Capital Partners, LP The value of private lending in the for-sale housing industry
s a result of limitations placed on commercial banks by regulators, coupled with the effects of the coronavirus, the ideal capital stack has become harder to secure, and ultimately, this tightening is requiring inves- tors to get creative. With some traditional banks still on the sidelines, an option more fre- quently availing itself to inves- tors is private debt. Most inves- tors interpret private debt as a financing option for sponsors with poor credit and/or limited experience. In some cases, that may be true, but more often and A
as is the case at Summit Capital Partners, LP, private lending is an alternative financing vehicle
loan) has been noticeable. Over the past 60-days, there has been a verifiable flight from
to existing plans. As far as we can see, this will likely be short lived and market partici-
Private lending takes many forms, and as with most in- dustries, has its fair share of dishonest participants. When considering a private lender, attempt to quickly understand who the decision makers are. The “quick close” often ad- vertised could be derailed by bureaucracy and committees within the firm. Smaller, but still well capitalized firms, may offer an advantage should timing be a critical element. Fromwhat we have seen, most sellers have been reasonable in tolling purchase agreements, but as restrictions loosen, buy- ers will need to be prepared to close. Timing (and lever- age) is a direct result of the lender’s market familiarity. More than ever, real estate is local and private lenders who limit their reach to certain geographic areas have the po- tential of moving quicker and providing better terms as they may already be familiar with a submarket. It is not a one size fits all model, but a private lending relationship could prove to be a valuable tool during these uncertain times. Summit Capital Partners, LP is a private lender that primarily originates senior mortgages and mezzanine loans collateralized by real estate throughout NY, NJ, PA and DE. MAREJ The Blau & Berg Co. arranges first capital markets loan SHORT HILLS, NJ — The Blau & Berg Company ar- ranged the first capital markets deal for the company. Scott Savastano of The Blau & Berg Company represented client, Camisa Physical Therapy and Sports Rehab. Savastano as- sisted in finding them 5,800 s/f to sublease for six months and then a lease thereafter. The space was previously a personal training gym. Savas- tano’s client purchased that business, assumed the remain- ing six months of the gym’s lease and created a brand new physical therapy facility inside the space. Savastano sought out loan possibilities and met with several banks and their SBA departments. Merrill Lynch and RBAC - Regional Business Assis- tance Corporation provided the SBA loan. This process be- gan in October 2019. MAREJ
Private lending is an alternative financing vehicle that provides short term, high leverage financing to experienced borrowers, specifically in support of single family and multifamily for-sale product.
that provides short term, high leverage financing to experi- enced borrowers, specifically in support of single family and multifamily for-sale product. Although we briefly paused in March and early April, the increase in activity (buyer and
the denser urban areas of New York City and Philadelphia to the suburbs of the Delaware Valley, central New Jersey and Long Island. Projects already in the ground will benefit from this wave of activity, but the virus may have just added urgency
pants should remain rational in their underwriting. A housing market to keep an eye on is northern Delaware --- proxi- mate to Philadelphia, one of the country’s most affordable states and a public-school system con- sistently ranked in the top-20.
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