Nebo Closes Unique Loan for Hospitality Company

A hotel investor/operator came to us with a $2,000,000 equity gap in their co-invest for a purchase money loan to fund an opportunistic hotel purchase.  There was only 2 weeks left to close the transaction with no possibility of an extension.  Nebo secured a family office investor who was able to structure a transaction with multiple preferred equity secured collateral and an assignment of certain cash flows.

Capital Source of the Week

This new fund is run by experienced players and will do deals from $3MM and up for opportunistic income properties.  They can do deals anywhere but have a preference for west of Mississippi.  The group is focused on non-coastal areas where they believe returns are better (going in cashflow is important to them) and will not shy away from secondary/tertiary markets and C+ assets.  They have the ability to close all cash and back fill debt later.  They will go out as long as 7 years but will also do short term deals.

Capital Source of the Week - Apartment Mezz and Equity

A number of apartment deals have come into our shop recently that have required mezz (often structured as preferred equity) behind both agency and non-agency debt.  There are quite a few excellent players in this niche that are able to do positions as small as $1,000,000 and up to $35,000,000.  Today we spoke with a player in this niche that can do up to 10-year terms at attractive rates.  In addition this same group will do JV equity for cash-flowing apartments and is focused on higher cap rate deals, which leads them to secondary and tertiary markets nationwide.  This accommodates an underserved niche in our view.  We would love to show this group solid C+ and better quality cash-flowing apartment deals in markets that aren’t experiencing extremely tight cap rates.

Nebo Closes $1.8M Refinance for Non-Profit

Nebo Capital recently closed a $1.8M refinance for a non-profit in the San Fernando Valley.  The non-profit had an existing credit line against their property that was a hang-over from an expansion performed several years ago.  In addition to the typical challenges of financing a not-for-profit enterprise, like most non-profits they had experienced cashflow issues during the recession.  While their financial position had increased dramatically many lenders wouldn't entertain the deal.  Nebo quickly identified a lender that not only was able to understand the cashflow and the stronger financial position today but moved extremely fast and closed in 3 weeks.  This significantly reduced the borrower's cost of debt, converted floating credit into term debt with a locked low rate and allowed them to focus on their mission of providing social services to their community.

Capital Source of the Week - Hospitality Lender

Nebo Capital is featuring a private lender specializing in hotels.  They like ground-up or value-add hotel deals in primary and secondary markets with major flags.  This is a great resource for good developers that took a hit during the downturn and now have solid transactions but some understandable credit issues.  They can provide higher leverage debt up to 80% LTC, non-recourse at single digit rates.  This group will move quickly for the right deal and has experience underwriting hotel transactions using EB-5 capital as an equity source.

Blitz Blast

The flood of new lenders continues unabated and they are all crying for yield and deals.

We like the looks of a number of intelligent real estate savvy re-position/bridge lenders, pref equity and mezz providers that we have spoken to in the last 60 days.  The pricing for bridge is coming down - in many cases to the 5% - 6% range but can still price at 8%+ rates.  Why?  IT DEPENDS!!!  We can’t stress enough the beauty contest that goes on to underwrite and price a deal.  It’s a real devil-is-in-the-details world out there, but we know how the underwriters think and can size up your deal to the market.  

One of the more interesting programs to enter the market is a long-term “mezz like” pref equity player for apartments.  They can go over 10-years and set initial pay rates to enhance the sponsor’s yield.  All-in rate would be low teens.  We have other mezz/pref equity players that can price a little inside of that for lower LTV and a class A assets.

One of the best niche development equity programs that just came online will take modest entitlement risk and sign on a construction loan.  This is only for western states and only multi family.

Capital sources are becoming more creative and competitive every day.

Blitz Blast

The flood of new lenders continues unabated and they are all crying for yield and deals.

We like the looks of a number of intelligent real estate savvy re-position/bridge lenders, pref equity and mezz providers that we have spoken to in the last 60 days.  The pricing for bridge is coming down - in many cases to the 5% - 6% range but can still price at 8%+ rates.  Why?  IT DEPENDS!!!  We can’t stress enough the beauty contest that goes on to underwrite and price a deal.  It’s a real devil-is-in-the-details world out there, but we know how the underwriters think and can size up your deal to the market.  

One of the more interesting programs to enter the market is a long-term “mezz like” pref equity player for apartments.  They can go over 10-years and set initial pay rates to enhance the sponsor’s yield.  All-in rate would be low teens.  We have other mezz/pref equity players that can price a little inside of that for lower LTV and class A assets.

One of the best niche development equity programs that just came online will take modest entitlement risk and sign on a construction loan.  This is only for western states and only multi family.

Capital sources are becoming more creative and competitive every day.

Capital Source of the Week - Single Family Debt and Equity Source

Nebo has identified a capital provider focused on single family residential development and construction that is backed by a large hedge fund and has a strong appetite to deploy capital through both debt and equity platforms.
On the debt side they’ll provide funds for SFR construction and will lend on acquisition and development for SFR as long as they also provide the construction dollars.  They’ll also lend on land under contract to be sold to a builder if there's at least a tentative map on the dirt at the time of loan closing.  Cost of debt is 8-11% with 0.5-2pts at close.  Loan sizes of $8-40M, up to 85% Loan-to-Cost.
On the equity side they will joint venture and provide funds for option payments and entitlement costs if there is a clear and short path to entitlement.  Equity investments of $2-10M.
This capital source will look at deals nationally but has a preference for the Western US.  They can move very quickly for the right deal.  We recently presented them a debt opportunity and they provided a term sheet in one day with a targeted close nine days later.
Please feel free to reach out to us if you have a deal that you'd like to discuss.

Capital Source of the Week - High Leverage Lender

Nebo Capital is featuring a direct lender based in Southern California who will do high leverage bridge or mezz loans on a national basis.  This is a new group made up of very sophisticated and experienced finance professionals.  They’re looking for deals in the $10-50M+ range for all major asset classes.  They will provide high leverage debt for note purchases, discounted loan payoffs, recapitalizations, and other situations that require “out of the box” thinking. This group invests in senior, mezz, and preferred equity positions and is less costly than most high leverage lenders.  If you have a distressed or opportunistic refinance or purchase with strong real estate fundamentals this is a great group to think of; they understand deals quickly and can move fast when necessary.

Blitz Blast

Conditions are excellent for capitalizing almost anything right now and in most cases the pricing and financing terms are amazingly good and may not be seen again for years.  Equity is more available than ever.

In 2012 we closed everything from sub 4% perm debt on stabilized commercial property to low 5% bridge debt on multi-family with “issues”.  We helped a few Purchase Money deals close that were at risk of falling apart by using mezz debt in the 13% range (essentially it acted as cheap equity).  As typical for us, we closed a few joint ventures on very opportunistic story deals with sub $10MM equity check writers.  This year we expect to see larger JV development deals (as there is capital hungry for these larger opportunities) as well as more “institutional equity” for sub $5MM equity checks.

Already in the 2013 hopper are a couple of multifamily construction loans, a retail construction loan, a few adaptive re-use deals and quite a few REO and discounted note deals which we did so much of in 2011 and really like doing.  There seems to be a resurgence of these opportunities in smaller deal sizes that have been less picked over.  We also expect to do a much greater number of “soft hard money” deals.

All in all we expect 2013 to be a great year for the market and our clients.  Please feel free to reach out to us anytime to discuss a deal or the market.

Nebo Closes $5M Retail Financing

Nebo Capital recently closed a $5,000,000 financing of a multiple location owner-user portfolio of retail outlets.  The portfolio had no existing debt so Nebo was able to quickly identify a lender that would provide cash-out for the owner and credit for future expansion at competitive rates.

Please reach out to us at any time to discuss your transaction.

Capital Source of the Week - Lost Cost Non-Recourse Cash-Out / Refi

We recently went under application with a cash-out refinace of a 30,000 ft2 office building with a rate under 4%!  This is non-recourse for a 11-year balloon loan (it would have been 10-years but it worked out as 11 years due to a special circumstance).   Even though the majority of tenants were newly leased start-up companies, the lender aggresively pursued the deal because of its excellent location, diversified tenant mix, and turn-key spaces in a great building.

Capital Source of the Week - New Mezz and High Leverage Bridge Money in the Market

A long established team has put together a new capital platform that will go up to 80% LTC on Mezz or Senior loans at attractive pricing in top 20 national markets.  All major food groups AND hotels will be looked at.  

Of particular interest is that they can go from $5mm to $100mm in size.  This is non recourse money!!!

BlitzBlast - Spotlight on Hotels and Others

We love all asset classes and each one seems to have its moment in the sun.  Right now apartments are getting quite a suntan but the somewhat surprising addition to the beach club is hotels.  In retrospect those few brave souls that purchased temporarily distressed / over leveraged, hotel trophy assets at little or no cash on cash return but for less than replacement cost (in that short window that existed for those transactions) have made out like bandits.  You had to have your own internal capital or have a brave and out of box thinking, long term, existing capital relationship to do those deals; as most everyone else was waiting for a bounce from the floor before considering deals.  I think there is a second bite at the hotel apple now and much more debt and equity for hotel deals that are still very compelling but maybe not trophy assets.  Branding is still very important but a very good non-branded deal with a good story, solid economics, and strong sponsorship is do-able with a cap stack and cost of capital that makes sense.

We currently are working on an A-/B++, mid-branded hotel in a stronger secondary market that is being purchased at a good going-in return based on trailing twelve months and has a very clear upside from executing a modest and simple business plan.  The prospective bridge debt is a higher leveraged instrument and well priced in the not-so-high single digits (and immediately accretive to cash on cash return).  The equity we are speaking with understands the market and the story of the property.  Based on improving fundamentals and a major restoration of investor and lender confidence, well priced permanent loans for hotels are no longer the "Impossible Dream" and rather are readily available, generally at or less than 60%-65% LTV with mezz available to go higher in the capital stack.

Getting back to the bright uplands of apartments (that can do no wrong) we have been quoted recently a very well priced 30-year amortization deal (fixed for a term you can pick from 3 to 10 years) for a neat, bread and butter, smaller building, older apartment property portfolio in a major market even though the borrower had been repeatedly ignored / turned down due to credit issues related to his recently taking some lumps on some assets he BK'd but eventually paid off in full.  In this case, the quality of the real estate and most importantly the willingness of the lender to really get into the story, which we laboriously explained and documented, did the trick.

We have established many new relationships and closed deals in the last twelve months with folks that call us because they received this blast and present a deal or prospective deal to us.  Please give us a call, we love hearing from you and the people you are welcome to pass this blast on to.  Our website now allows anyone to sign up for this blast that is not already on our list!

Blitz Blast - Spotlight on Hotels and Others

We love all asset classes and each one seems to have its moment in the sun.  Right now apartments are getting quite a suntan but the somewhat surprising addition to the beach club is hotels.  In retrospect those few brave souls that purchased temporarily distressed / over leveraged, hotel trophy assets at little or no cash on cash return but for less than replacement cost (in that short window that existed for those transactions) have made out like bandits.  You had to have your own internal capital or have a brave and out of box thinking, long term, existing capital relationship to do those deals; as most everyone else was waiting for a bounce from the floor before considering deals.  I think there is a second bite at the hotel apple now and much more debt and equity for hotel deals that are still very compelling but maybe not trophy assets.  Branding is still very important but a very good non-branded deal with a good story, solid economics, and strong sponsorship is do-able with a cap stack and cost of capital that makes sense.

We currently are working on an A-/B++, mid-branded hotel in a stronger secondary market that is being purchased at a good going-in return based on trailing twelve months and has a very clear upside from executing a modest and simple business plan.  The prospective bridge debt is a higher leveraged instrument and well priced in the not-so-high single digits (and immediately accretive to cash on cash return).  The equity we are speaking with understands the market and the story of the property.  Based on improving fundamentals and a major restoration of investor and lender confidence, well priced permanent loans for hotels are no longer the "Impossible Dream" and rather are readily available, generally at or less than 60%-65% LTV with mezz available to go higher in the capital stack.

Getting back to the bright uplands of apartments (that can do no wrong) we have been quoted recently a very well priced 30-year amortization deal (fixed for a term you can pick from 3 to 10 years) for a neat, bread and butter, smaller building, older apartment property portfolio in a major market even though the borrower had been repeatedly ignored / turned down due to credit issues related to his recently taking some lumps on some assets he BK'd but eventually paid off in full.  In this case, the quality of the real estate and most importantly the willingness of the lender to really get into the story, which we laboriously explained and documented, did the trick.

We have established many new relationships and closed deals in the last twelve months with folks that call us because they received this blast and present a deal or prospective deal to us.  Please give us a call, we love hearing from you and the people you are welcome to pass this blast on to.  Our website now allows anyone to sign up for this blast that is not already on our list!

EOY Closings - Close Your Bridge Financing Before the World Ends!

We're coming into the home stretch of 2012 and most deals that will close this year are already in the works.  That being said, Nebo has several bridge lenders that can still move quickly and execute before the end of the year.  This capital is looking for fast moving acquisitions, recapitalizations, and opportunistic transactions with good sponsors.  If you have a deal that needs to close before the end of the year per the Julian Calendar OR the END per the Mayan Calendar you need to call us ASAP.

Blitz Blast - Capital is Back!!!

Nebo attended the MBA Conference this year and the prevailing message was that the capital markets are back in full force!  Here's a brief summary:

 
Private Opportunity Fund/Non-Hard Money Lenders:

Most of the private portfolio lenders are pricing between 6.25% and 7.50%, nonrecourse, 1% loan fee with some call protection, typically at least 12 months. Most are $10M minimum, dipping below that for clean transactions with one lender going as low as $1M for a premium yield, but still in single digits. Most will also fund mezzanine or preferred equity and we heard as high as 100% of the discounted payoff amount if the value is there for the right asset, but for a premium. A few have closed condo inventory loans recently and one of these groups funded preferred equity without a recognition agreement behind a low leverage conduit loan. In total, these groups funded in excess of $1B in 2010.
 

Conventional Banks:

We met with four banks, two of the banks had programmatic nonrecourse portfolio lending for existing assets, the other two are funding construction loans. The first nonrecourse lender will fund up to 80% LTV for multifamily up to seven years fixed with a 15 year term from $1M to $20M at 5.50% to 6.50% floor, but for commercial a minimum $10M and limited to 75% LTV. The other bank closing nonrecourse loans is seeking a range of $25M to $300M and will not lose a deal they really like on pricing. The first recourse lender will price at 250 over LIBOR with no floor (yes, below 3%) and allow a swap up to 10 years with an earnout feature on value add transactions up to a 10% debt yield at stabilization (NOI divided by loan amount), which can be a fixed rate, or revolving credit facility.
 

Conduit Lenders:

With a few billion dollars under their belts, all of the conduit lenders had multi-billion dollar goals for 2011, with one forecasting as high as $10B in the next 12 to 18 months.  One group is doing internal mezz to a 1.10 DCR coterminous with the first, 1% fee, 12% to 15% interest, pre-payable at par at any time. One group is buying the non-investment-grade tranches of the securitization, increasing the certainty of execution. Pricing today is between 6.0% and 6.50% fixed for 10 years with spreads ranging from 220 bps to 270 bps over 10 year swaps.


Life Insurance/Pension Fund Lenders:

We met with four lenders in this group, the first lender in this group will go down to $7,000,000, up to $100,000,000, priced 160- 225 bps over the treasury (10 years fixed from 5.25-5.90%), 60% to 70% LTV, typical 60 day close (as fast as 35 days) 25-30 year amortization. The second lender in this group will fund nonrecourse construction loans requiring union labor ranging from $10,000,000-$30,000,000, 7% to 7.50% rate, 65 to 70% LTC for apartments, 60-65% for commercial, sized to a 1.20 or 1.25 DCR on a 7.50% loan constant (equivalent to a 6.40% rate and 30 year amortization). The third lender will fund as small as $5,000,000, as short as three years and a fourth pension fund is looking for very large transactions with some appetite for forward commitments.
 

Mezzanine/Equity:

While approximately half of the lenders above will do mezzanine and/or equity, three of the groups we met are strictly focused on this capital. The first is a preferred equity structure where they will fund 80% of the required equity, charge a 10% preferred rate of return with a 30% promote. The partner gets its money back first, then the sponsor, the partner gets its preferred first, then the sponsor, then 50/50. The second source of mezzanine/equity financing has recently funded preferred equity without a recognition agreement from the CMBS lender, is seeking returns from 11% to 13%, up to 85% LTC, 80% LTV with a minimum 1.10 DCR, coterminous with the first mortgage, interest only, minimum 18 months yield maintenance, cash out allowed and will fund 100% of a DPO. The third lender is doing low-cost mezzanine on cash flowing assets and will do joint venture equity on vacant buildings with an overall fund targeted IRR of 18%, but sizing is usually 13% to 15%. The partner requires a 10% coinvestment, 8% preferred return with a two or three tiered waterfall ending at a 50/50 split after the JV partner achieves an 18-20% IRR. In addition to funding several vacant office and industrial buildings, they have also funded all types of residential lots. -

Nebo Blast - About

We Structure All Types of Commercial Real Estate Finance Including:

  • Bridge Financing
  • Acquisition Financing
  • Mezzanine Debt
  • Preferred Equity
  • Joint Venture Equity
  • Structured Financing

For All Commercial Real Estate Transactions Including:

  • Distressed Asset Acquisitions
  • Distressed Note Purchases
  • REO Acquisitions
  • Discounted Performing Note Purchases
  • Note Buybacks
  • Deal Recapitalizations
  • Fractured Condo Projects
  • Partially Completed Construction Projects
  • Partner Buyouts
  • Development Financing
  • Investment Acquisitions
  • Cash-Out Refinance
  • Asset Repositioning
  • Multifamily Financing Including HUD/FHA

We Provide Advisory Services Including:

  • Portfolio Valuation
  • Workout Assistance & Negotiation
  • Entitlement Work
  • Feasibility Studies
  • Expert Witness
  • Marketing
  • Brand Development
  • Market Positioning
  • Adaptive Re-Use Assessment
  • Appraisal
  • Development Service

Blitz Blast

Until recently it seemed all we could do is "entertain" you with what the market wanted but you did not.  This is changing fast and we have numerous deals being quoted and soon to close on terms that make sense for both capital provider and capital user.  Every deal is unique but  we can give you a roadmap to guide you in one phone call.  Call us on you current or pending needs.