14A — June 10 - 23, 2016 — Financial Digest — Creative Financing — M id A tlantic
Real Estate Journal
www.marejournal.com
C reative F inancing
Kennedy Funding Financial Lending on land: Expect the unexpected
F
rom a lending stand- point, banks and com- mercial real estate have
turn to lenders like KFF. “What many don’t understand about banks is they’re not in the business of seeing what you see in a property,” Wolfer said. “Their business model may not work with yours from a profit-and-loss and cash flow standpoint, but there are other options to get a project to frui- tion. That’s where bridge loans can prove very useful.” Indeed, while banks may avoid raw land deals, they aren’t necessarily completely off the table. But many consid- er land deals too risky because of that lack of immediate cash flow and the risk of default
deemed to be greater. The key to closing raw land deals in this environment is having the right partners, says Wolfer. Hiring an attor- ney with experience in closing such deals is critical, and the right lending partner is also key. “There’s no substitute for experience in making raw land loans happen, period,” he said. An experienced partner like KFF can make the process not only possible, but fast. “With all documentation including titles and deeds clearly provided and required environmental surveys and assessments up-to-date, deals can be closed in under
approvals, to viability, to devel- opment-related costs that can materialize out of thin air—ev- erything from real estate taxes to environmental remediation. “The primary issue for banks is cash flow, or lack of it,” said Kevin Wolfer , president and CEO of Kennedy Funding Financial (KFF) . “Land may be valuable ‘someday’ but un- til it’s improved, a bank may not readily see the value. And unexpected costs are an impor- tant factor as to why a loan to improve a great location may not be forthcoming.” To fill that void, savvy real estate investors increasingly
two weeks—but only if the lender is prepared,” he said. Wolfer also cautions borrow- ers to be careful when deciding to invest in land. Payment and debt levels must be analyzed to make sure the property can generate income and stable cash flow. While bankers may still say “no deal to land loans,” hard work and experience means they can still happen. Indeed, according to Wolfer, land is only one of the reasons people have turned to KFF, but it’s becoming a bigger part of the business. That commit- ment has been demonstrated by several recent transactions, including a $1.6 million loan for a 16-acre development site, cleared for 67 residential and commercial units totaling 162,000 s/f in Colchester, CT. In North Kingston, RI, Ken- nedy provided $1.8 million for 5.3 acres zoned for a 200,000 s/f mixed-use, transit-oriented development. In Sidney, MT, $1.41 million was provided for 22.6 acres, comprising 18 lots zoned residential and commer- cial. And Kennedy provided $1.75 million for a 209-acre site zoned for high-density mixed-use in Long Beach, MS. “From our perspective, each site, each borrower and the long-term plans all met our requirements,” said Wolfer. “We remain poised to fund the right project, in the right location, all over the country, and we know we are providing the impetus for projects that might not otherwise meet the banks’ requirements.” n Kennedy Funding Financial unveils lending program ENGLEWOOD CLIFFS, NJ — Kennedy Funding (KFF) , well-known nationally as a high-end direct private lender, has introduced an in- novative new lower-rate lend- ing program focused on spe- cific property types. The 6&3 Lending Program is now in place for multifamily proper- ties, shopping centers, offices, and other qualified properties. “The 6&3 stands for a 6% interest rate plus three points, specifically targeting invest- ments in income-producing properties across the country,” said Kevin Wolfer, president and CEO of KFF. “Income- producing properties are an economic staple, and it is our goal to foster investment in these types of properties. n
a complicated relationship. Economic cy- cles are part of that, but so are prop- e r t y t ype s and cond i - tions. Why, for example,
Kevin Wolfer
are banks hesitant to provide loans for undeveloped land? In reality, land is anything but a simple proposition—it can tangle up transactions because of everything from zoning and
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