Capital Spotlight – Highlighting featured capital investors. We regularly publish the detailed criteria of our most unique real estate capital sources.
In the ever-evolving landscape of commercial real estate finance, developers and investors often find themselves at a crossroads when traditional banks tighten lending criteria or demand hefty deposit relationships for CRE loans. This challenge is particularly acute for projects outside the multifamily sector, where agency-backed financing isn’t an option. Enter a robust $10B+ private fund based in Canada, designed to bridge these financial gaps and propel projects forward. This fund offers a compelling solution with lending terms up to 65% LTV, focusing on interest-only (I/O) debt service with competitive rates in the high 6s. It’s an ideal fit for recently stabilized industrial properties demonstrating solid cash flows, or for grocery-anchored retail centers employing successful blend-and-extend strategies, located within the top 25-50 MSAs across the U.S.
Beyond permanent debt solutions, the fund manages three additional capital buckets: subordinate capital, construction debt, and bridge debt. With current economic pressures from supply-chain uncertainties and heightened interest rates, constructing new developments requires not only financial acumen but also strategic capital structuring. This fund excels in providing up to 80% LTC construction facilities, catering to multifamily, student housing, and industrial projects in high-growth MSAs—reserved for experienced sponsors.
In today’s market, having access to versatile capital sources and the ability to engage in creative financing structures is crucial. As such, ensuring a comprehensive exploration of available capital avenues is paramount for the savvy investor.
Senior Construction & Bridge Debt | Mezzanine & Preferred Equity | Permanent Debt | |
Project Type | Construction and Value-add | Value Add and Construction (Mezzanine only for Construction) | Stabilized or nearly stabilized assets |
Geography | Nationwide | Nationwide | Nationwide |
Property Types | Multifamily; Industrial; Student Housing; Grocery-Anchored Retail | Multifamily; Industrial; Student Housing; Grocery-Anchored Retail | Multifamily; Industrial; Student Housing; Grocery-Anchored Retail |
Use of Funds | Construction; Acquisition; Refinance; Renovation Costs; Interest Reserves. Will fund cash out assuming the property has received added value, or has been seasoned. | Construction (mezz only); Acquisition; Refinance; Renovation Costs; Interest Reserves. Will fund cash out assuming the property has received added value, or has been seasoned. | Acquisition or Refinance (good news money available for TI/LCs) |
Construction | Ground-Up; Heavy Value-Add; Redevelopment | Ground-Up; Heavy and Moderate Value-Add; Redevelopment | Stabilized / Light Value-add |
Sponsorship | Sponsor should have at least 4-5 similar projects completed. | Sponsor should have at least 4-5 similar projects completed. | Flexible |
Recourse | Typically, non-recourse, partial recourse in certain higher risk scenarios | Typically, non-recourse, partial recourse in certain higher risk scenarios | Non-recourse |
Check Size | Bridge Debt: $30MM and up Construction Debt: $50MM and up | $10MM + | $30MM and up |
Max Loan to Value / Loan to Cost | Bridge Debt: 80% LTC Construction Debt: 80% LTC max (LTC is driven by stabilized debt yield) | 80% LTC max (LTC is driven by stabilized debt yield) | 65% LTV max (as-is value) |
Interest Rate | Bridge Loan: SOFR + 315 – 395 (8.45% – 9.25% today) Construction Debt: SOFR + 425-600 (9.55% – 11.30% today) ** subject to leverage request, market, sponsor experience, and stabilized debt yield | 14 – 16% (6-8% current Pay) | 235 over Treasuries full-term fixed rate I/O |
Loan Term | Bridge: 2, 1 (can be flexible) Construction: 3,1,1 | 2,1 (can be flexible) | 3, 5, 7-year options available |
Origination Fees | Construction Debt: 0.75-1.25% Perm Debt: 0.25-0.75% | 1.5-2.0% | 0.25% – 0.75% |
Payment Structure | Full I/O | 6-8% current pay with PIK | Full I/O |
Prepayment Structure | 18-24 months | 18-24 months | 3 years followed by step down |
Underwriting Requirements | Targeting a 7.5% – 8.25% debt yield (Capable of trending rents subject to market) | Targeting a 7.5% – 8.25% debt yield (Capable of trending rents subject to market) | Perm Debt: 1.20-1.25X DSCR assuming I/O debt service |
Deposits | Market standard deposit required upon signing of term sheet to fund appraisal, environmental, title, legal and property condition reports. | Market standard deposit required upon signing of term sheet to fund appraisal, environmental, title, legal and property condition reports. | Market standard deposit required upon signing of term sheet to fund appraisal, environmental, title, legal and property condition reports. |
Closing Time Frame | 45-60 days on average (can close as quickly as 4 weeks) | 45-60 days on average (can close as quickly as 4 weeks) | 45-60 days on average (can close as quickly as 4 weeks) |
Approval Process | 7-14 days for an approved term sheet (subject to a complete underwriting file) | 7-14 days for an approved term sheet (subject to a complete underwriting file) | 7-14 days for an approved term sheet (subject to a complete underwriting file) |
If this capital source may be of interest, book a call to discuss a potential capital arrangement.
Read our last Capital Spotlight: Capital Spotlight: PE Fund Stays Active, Making $1-30MM LP Investments with Local Value-Add Multifamily Operators