We often find ourselves complacent with “working” results and apply the why fix it, if its not too broken attitude. This applies to the landscaper, email services, car insurance, and even the barber who gives us bad hair cuts, yet we continue to go to him out of habit. But a capital partner? Having the right commercial real estate capital partner(s) can not only deliver more returns into your pocket, it can grow your business significantly.
We recently caught up with the a number of funds we work with to talk through their 2020 lending/investment strike zones. A handful of funds are offering 100% construction financing for net lease developments. If you are looking for STNL construction financing, or Net Lease construction financing and want to take the leverage to 100%, there are well priced financing options tailor made for STNL and Net Lease developments.
Lenders and Investors change their investment parameters for multiple reasons: balance their portfolio by product type/geography, be more attractive to borrowers, increase capital outflow, earn higher returns, alter their portfolio LTV levels, etc. If you are not in regular discussions with multiple lenders/investors you will never know if you are with right capital partner(s) for the right projects.
Here is a recent project we worked on where we realized a couple private funds we work with offered better financing solutions and why.
Deal Overview– $6M Credit STNL build-to-suit with a 10 year lease. For construction financing we spoke to a local bank and two private funds, here are the key take away points:
- The local bank offered 80% LTC with a personal guarantee (70% without a personal guarantee), the developer would have to contribute $1.2M of cash.
- Two of the funds we work with offered 100% LTC on this project. The first fund’s terms were at 7.75% with no back-end participation, or personal guarantee. The second fund offered a programmatic joint venture with a forward commitment for future STNL developments that had a waterfall return structure.
- Both funds’ terms were more economical to the developer.
- Both funds’ due diligence and funding timelines were less than the bank.
- Both funds’ structures allowed the developer to pursue multiple development projects at the same time, without tying up 20-30% cash for each project like the bank’s structure.
- Both funds offered to design a rubber stamp process to do multiple BTS STNL deals with the developer and tenant.
By not exploring capital options, there is a good chance you are leaving money on the table, or worse its costing you time and opportunities.
If you are looking to buy commercial properties, or seeking land for development opportunities LDCRE has $800+ Billion of commercial real estate for sale marketed via its platform. We work with hundreds of equity and debt providers to place construction debt, senior debt, bridge debt, preferred equity, joint venture equity, etc.
Brendan W. Hotchkiss, LDCRE Companies