12A — March 15 - 28, 2013 — Mid Atlantic Real Estate Journal
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wice now in the last six months, our firm has put together some real- By Brenner Green, Real Property Capital, Inc. The market is ready, are you ready for it? T (pegging the actual loan-to- cost somewhere around 95%). This structure was offered on a straight coupon basis with no equity participation by the mezzanine lender.
Recent Closings Multifamily - Philadelphia, PA
with a mezzanine loan at up to 88% of total project cost and at around 107% of the purchase price (there was a significant capex program as part of the acquisition). The overall rate was to be sub 6.5%. As would be expected, both loans were non-recourse. What is really interesting is that in both instances, after engaging us to arrange what might seem like a nearly im- possible structure, and after sourcing exactly what the client requested, they decided not to proceed. All of this financing was arranged through capital sources that are long term trusted relationships with which we have closed numer- ous transactions in the past, so from our perspective there was no reason to question the ability to deliver. However, when the time came, the clients could not get comfortable with pulling the trigger on what they had asked for. Why would this be? We brought the client exactly what they asked for and they decided not to proceed. In both cases, they opted for a less attrac- tive deal from a more familiar lender. As you might imagine I have thought long and hard over that one. The answer is, simply, a matter of trust. While there is some degree of greed returning (rather quickly) to the market, fear still prevails. However, the type of fear isn’t the “oh my god we may not make it through this cycle” type of fear that the vast majority of us experienced around 2009, but rather a mistrust of Wall Street and high finance in gen- eral. Many real estate investors are going with the simple bank- type structures that are safe and familiar. And while that is understandable given what we have all been through over the last five or six years, I am here to tell you that you are missing out. There are many legitimate well-funded capital sources out there ready to offer something a little bit less conventional and perhaps a little more aggressive than what we have all become accustomed to in the “new nor- mal.” For better or worse, Wall Street is back into real estate and with Wall Street comes leverage. Leverage is back, the deals are real and the time is now. Are you ready? R. Brenner Green is presi- dent of Real Property Capi- tal, Inc. based in the Phila- delphia suburbs. n
ly innovative and aggres- sive financ- i n g s t r u c - tures that are reminiscent of the pre-re- cession, dare I say “bubble e r a ” d a y s .
The second deal was probably more significant in that it was for the acquisition of 728 lower quality apartments in a ter- tiary location (Tulsa, OK) for a client whose current portfolio is comprised of around 500 units. The client has a good track record but a limited balance sheet and limited experience. In this instance we were able to secure bridge financing joined
Brenner Green
75 East Butler Avenue • Ambler, PA 19002 610-456-9644 • bgreen@realpropertycapital.com www.realpropertycapital.com
The first was a mezzanine loan for a student housing development in Georgia that of- fered up to 92% of total project cost, including developer fees
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