Capital Spotlight – Highlighting featured capital investors. We regularly publish the detailed criteria of our most unique real estate capital sources.
Valencia Realty Capital recently interviewed an established private capital provider with more than 20 years of commercial real estate investment and lending experience. Due to an increase in competition in the debt fund space, this lender found their loan product not as competitive compared to years past. While they were historically recognized for being a high-leverage construction lender, they recently released a new bridge loan product to satisfy market demand and maintain consistent deal flow. This lender’s primary objective is to utilize their institutional level underwriting expertise to uncover value skipped over by other credit funds and traditional bank financing while providing higher leverage loan solutions. That said, they can now offer a bridge loan product in the SOFR + 350-450 range, which will act as a competitive product in the 75-85% LTC loan product space.
Product Suite: Construction & Bridge Solutions
The dynamic between cost of capital, leverage, and recourse are what put this group ahead of many other private credit groups. While many sponsorships pursuing a private debt facility must compromise on certain terms when looking for flexibility in the capital structure, this isn’t the case here. The two key dynamics that unlock the highly competitive terms listed below are sponsor quality and location.
Key Loan Characteristics
- Typical Deal Size: $10MM – $100MM
- Loan to Cost: up to 85% LTC (Bridge), Up to 80% LTC (Construction)
- Interest Rates:
- Bridge Debt: SOFR + 350-450 bps
- Construction Debt: SOFR + 550-650 bps
- Amortization: Interest-only
- Recourse: Non-recourse and limited recourse available
Geographic Appetite and Asset Classes
- Core Focus: Southeast, Southwest, Midwest, and Mountain West
- Opportunistic: Other U.S. regions considered on a case-by-case basis
- Asset Classes: All major commercial property types are considered, with an emphasis on multifamily, BTR, condo construction, industrial, and mixed-use projects
Conclusion
With a lean, experienced team and deep market familiarity, this lender has built a reputation for certainty of execution, quick committee turnarounds, and the ability to close within accelerated timelines as needed. Sponsorships with relevant project and market experience are heavily taken into consideration when sizing facilities.
This credit fund recently released these offerings and is already noticing a significant uptick in capital placed. If you are an established sponsor with an exemplary track record in one of the core focus markets listed above, this capital source could be the boost your next deal needs to pencil.
If this capital source may be of interest, book a call to discuss a potential capital arrangement.
| Capital Types | Senior Bridge Debt, Senior Construction Debt |
| Geography | Southeast, Southwest, Midwest, and Mountain West |
| Property Types | Multifamily, BTR, Condo Construction, Industrial, and Mixed-use projects |
| Check Size | $10MM – $100MM |
| LTV/LTC |
|
| Target Stabilized Debt Yields | 7.5% – 8.5% stabilized debt yields (subject to specific markets and sponsor experience) |
| Interest Rate |
|
| Lender Points | 1 point in, 1 point out |
| Term | 12-36 months, with extension options |
| Min Interest | Flexible, Subject to the requested term of the loan. |
| Sponsorship | A strong sponsorship with a demonstrated track record in prior comparable deals and strong PFS are necessary to achieve competitive terms. |
| Recourse | Non-recourse and limited recourse available |
| Closing Timeline | 30-60 days (subject to deal complexity) |
If this capital source may be of interest, book a call to discuss a potential capital arrangement.
Read our last Capital Spotlight: “Private Credit Group Structuring Quick Closing Bridge Debt at SOFR + 275-375″