PROFESSOR'S CORNER
From the Desk of Professor Eyzenberg
With various lockdown philosophies governing different states, the market recovery has not been uniform. However, the capital markets have continued to heat up with anticipation of a return to normalcy being an inevitability. Liquidity returned for select Retail opportunities (necessity & grocery) as well as Hospitality (resort and drive-to leisure), while demand for Multifamily and Industrial continued unabated.
As is the norm when greed trumps fear, the capital markets got out ahead of on-the-ground fundamentals. To fill the gap, new structured financing products continued to make their way into the stack. More cities and states enacted C-PACE legislation, allowing the energy efficiency-focused money to flow into real estate. However, lenders seem to have divided themselves into two camps of philosophy when it comes to C-PACE (not unlike ground leases).
On one hand (primarily), those from the securitization world viewed the whole C-PACE loan amount as senior to theirs and thus reduced proceeds to a target LTV/LTC criteria. On the other end (primarily), balance sheet lenders accounted for C-PACE payments (special assessment taxes) as a long-dated, though temporary, increase in operating expenses and therefore adjusted their sizing on debt yield and/or DSCR hurdles.
This meant that assets that were built to an attractive, untrended yield on cost (6.5%+) could absorb the higher tax assessment and therefore would not have senior loan proceeds reduced.
Our company, sitting at the crossroads of senior debt and C-PACE, takes the viewpoint that C-PACE should be treated as an operating expense. Thus, Eyzenberg GreenCap has partnered with ReedsBay to provide a full-stack solution combining C-PACE with senior debt, adjusted only for operating costs and not for the C-PACE loan amount. We believe that the non-acceleration nature of C-PACE makes it distinctly different than senior debt and therefore should be viewed differently. Read more about this below. – David Eyzenberg (Adjunct Professor at NYU Schack & UM Herbert Business School)
RECENT CLOSINGS
Select completed transactions
PROPRIETARY CAPITAL SOLUTIONS
Spotlight on Select Programs
Eyzenberg GreenCap is a partnership between Eyzenberg & Company and Greenworks Lending, uniquely dedicated to funding commercial real estate transactions through C-PACE. Click here to learn more about the program and your project’s eligibility.
Eyzenberg GreenCap: C-PACE Funding Parameters
Transaction Scenarios:
- New development, acquisition with a heavy renovation component or recapitalization in tandem with a redevelopment of the property
Property Types:
- All commercial property types and select alternative asset classes
Funding Size:
- $1MM-$150MM+, smaller requests reviewed on a case by case basis
Recourse:
- No repayment or carry guarantee, completion guarantee burns of at TCO
Pricing:
- % to 6.5%, dependent on term, location, use and leverage
Term & Amortization:
- Self amortizing (no balloon) with terms up to 30 years (based on estimated useful life of the improvements
Max Lien-to-Value:
- 90% (combined debt) for new developments / 95% for retrofits
Max LTV/LTC:
- 25% of as completed value / 30% of total capitalized budget for new developments (higher for retrofits)
Prepayment:
- No lockout but subject to a pre-negotiated fee
Geography:
- Currently active in 24 states and D.C. States include: CA, CO, CT, DE, FL, IL, KY, MA, MD, MI, MN, MO, NE, NV, NY, OH, OK, OR, PA, RI, TN, TX, UT, VA and WI.
Reeds Bay Investment Group is an investment management firm specializing in income-oriented investments that leverage our expertise, process, and access to middle-market CRE investments throughout the United States. Click here to view our project guidelines.
ReedsBay: Project Capital for Middle Market Commercial Real Estate
Property Type:
- All major property types considered
- Primary: Multifamily, Mixed-Use, and Office (select situations)
Loan Size:
- $1-15 million (larger loan sizes considered on a case-by-case basis)
Leverage:
- Up to 85% (additional proceeds available in select situations)
Use: (All include an option for future funded TI/LC and CapEx facility)
- Acquisitions
- Developments
- Repositionings
- Recapitalizations
- Note Financings
- Special Situations
Available Structures:
- Senior Secured Loans
- B-Notes
- Mezzanine Debt
- Preferred Equity
Geography:
- Domestic growth markets and locations with identifiable demand drivers and inventory supply constraints
Pricing:
- Variable: Starting at LIBOR + 700 bps with a risk-based floor
- Fixed: Starting at 8.0%
- Interest-only
- Market competitive origination, exit, and extension fees adjusted to loan size, timing, and complexity
Term:
- 6 months to 3 years with extension option available
- Prepayment available, subject to fees and/or minimum return requirements
Recourse:
- Non-recourse, except for standard carve-outs & carry/completion guarantees
CURRENT OFFERINGS
Select completed transactions
Construction Loan
Construction Loan
$6.7MM | Multifamily | Development | Newton, NC
JV Equity
$16MM | Single-Family Rental Housing | Acquisition | Philadelphia, PA
Construction Loan
Construction Loan
Select Deals Seeking Developers
$45MM | Multifamily | Development | Pensacola, FL
400-Unit Leasehold Development
$62MM | Multifamily | Development | Bonita Springs, FL
366-Unit Co-Development
$21MM | Multifamily | Development | Panama City
RECA CORNER
Real Estate Capital Alliance (RECA) Q1 2022 Production Statistics
Eyzenberg & Company is a proud member of the Real Estate Capital Alliance (reca.us). RECA members arranged over $4 billion in capital in 2020. Below are the complete RECA production statistics for Q1 2021.
