“I would not interpret the currently very flat yield curve as indicating a significant economic slowdown to come.” (and subprime is contained….)
– Ben Bernanke (March 2006)
Though this is a (albeit late) 4th quarter newsletter its hard not to reflect on what’s going on today. Lets start with that nasty sounding “ (partially) Inverted Yield Curve.” This is not the norm and is usually a symptom of a bigger problem. In reality, yields reflect risk and risk is supposed to increase with time. When this relationship is inverted it usually presages a recession. If this pattern has often repeated itself how come it feels like no one is really acting differently? This question raises many winding answers, impossible to tackle in this medium alone.
However, an interesting topic to explore is should you go fixed vs. floating? As with many things the answer is, it depends on your micro and macro view. I would argue that if your crystal ball is warning you of stagflation (as mine is) than you want to go fixed. Stagflation is the worst of both worlds where you have high inflation and low output. In a stagnant environment wage growth cannot and does not keep up with rising costs. This puts more risk on value add deals or those development that depend on rent trending to pencil out.
The fixed-rate loan shelters you from the rising interest rate environment and protects you from situations where the repositioning play does not get executed on time. There have been many owners that have won the interest rate bet by continuing to float on stabilized assets. Though for the last 40(ish) years there has never been a 10-year period where it was cheaper to be fixed vs float this was before the 1970s stagflation era. For the risk averse or those with perfect future vision I recommend fixing. Next (hopefully on time) newsletter I hope to tackle the counter argument of borrowing floating in an inflationary environment for value add / opportunistic deals.
– David Eyzenberg (Adjunct Professor at NYU Schack Institute of Real Estate & University of Miami Herbert Business School)
Select completed transactions
$34MM Multifamily | Acquisition | Rochester, New York
Identified a private equity firm willing to provide a highly levered preferred equity solution.
ReedsBay Investment Group and Eyzenberg GreenCap (an Eyzenberg & Company affiliate) have rolled out the industry’s first joint senior-construction and C-PACE loan program. Combined, the two firms will offer a true one-stop-shop for developers and owners seeking the most efficient capital stack structure in the market place.
Blended at 6.5%+
New development, acquisition with a heavy renovation component or recapitalization in tandem with a redevelopment of the property
Multifamily or Multifamily-majority Mixed Use
Combined Funding Size
Up to 90% LTC
Term & Amortization
Senior: 6 months – 3 years (with options for extension)
C-PACE: Self-amortizing up to 30 years
No lockout but subject to pre-negotiated fees
Currently active in 24 states and the District of Columbia – CA, CO, CT, DE, FL, IL, KY, MA, MD, MI, MN, MO, NE, NV, NY, OH, OK, OR, PA, RI, TX, UT, VA, and WI
No repayment guarantee
$100MM | BTR | Development | Panama City Beach, FL
$6MM | Multifamily | Acquisition | Sioux Falls, Sd
$16MM | Multifamily | Development | Miami, FL
$40MM | BTR Short Term Stay | Development | Houston, TX
$8MM | Retail | Acquisition | Clermont, FL
AVAILABLE JOINT VENTURE EQUITY
There is great demand from domestic and foreign equity investors for multifamily, build to rent, industrial, office and self-storage assets, with hospitality and retail having niche appeal as well.
The typical raise will target 20-100M check size for core plus, value-add and opportunistic strategies in 24/18 hour cities.
Though many past assignments involved one-of transactions, there is strong interest in programmatic joint ventures with operators focused on sector-specific, geographically clustered strategies.
– Henry Chakardjian & Kenneth Lorman (Eyzenberg Equity Desk Leads)
Eyzenberg & Company is actively seeking to add team members to join our growing firm. In this video, our President gives the intro.
Real Estate Capital Alliance (RECA) Q4 2022 Production Statistics
Eyzenberg & Company is a proud member of the Real Estate Capital Alliance (reca.us). RECA members arranged over $3.9 billion in capital in 2021. Below are the complete RECA production statistics for Q4 2021.
Aruyel Nurbekova joined Eyzenberg & Company in 2022 as Junior Analyst. She assists with underwriting, analysis, and financing memoranda preparation for commercial real estate debt and equity capitalization assignments.
Prior to joining the firm, Ms. Nurbekova worked as a Business Valuation Analyst at Ernst & Young company, one of the Big Four accounting firms.
Ms. Nurbekova completed her Bachelor of Science degree in Corporate Finance and Investment Management at KIMEP University in Almaty, Kazakhstan.
D: (305) 995-0777
Mr. Muniak joined Eyzenberg & Company in 2022 to focus on debt and equity originations in his newly adopted home of South Florida.
Mr. Muniak is Co-Founder and Managing Partner at Makal Equities, a real estate investment firm specializing in multifamily, industrial and retail property in Southern California and New York. He invested, sourced, and underwrote all commercial development and investment opportunities during this time. Furthermore, Mr. Muniak’s previous position as Managing Director at a Family Office in New York allowed him to develop his skills as he increasingly became involved in all aspects of fundraising and deploying the fund’s investment mandate. In his career to date he has invested, sourced, and underwrote commercial development and investment contracts, exceeding 100 million dollars.
Furthermore, Mr. Muniak is a Board Member and shareholder of the Mangia Hospitality Group in New York, where he oversees all aspects of fundraising, including the Group’s investment mandates. As a strategic dealmaker, Mr. Muniak is responsible for retail acquisitions & new developments and acts as a liaison with City and State Government bureaus. Due to his established reputation as a key player in the real estate and hospitality industry, Mr. Muniak has managed to build a wide portfolio of bicoastal projects and has worked closely with top developers, entrepreneurs, and restaurateurs nationwide.
Originally from New York City, Mr. Muniak graduated from Johnson & Wales University in Rhode Island, and completed his graduate Business certificate in Sydney, Australia. He is a long-time martial artist and a philanthropist.