Featured Financing - EOY JOY or NO JOY

With Thanksgiving around the corner now is the time to begin the process for deals that need to close by the end of the year (EOY).  Every December we see a barrage of financing requests for deals that must close by EOY, some of these get funded (JOY) and some don't (NO JOY). Even the ones that do close sometimes pay for that rapid execution in higher pricing, tougher terms and certainly lost sleep.  If you have a deal that needs to close by the end of the year we should start the conversation TODAY so we can target a close before the holidays start slowing down the process (and the risk of deals getting pushed out or falling through goes up).  Reach out to us at any time to discuss your transaction.

Capital Source of the Week

Major national footprint bank offers a 5.00% to 5.25% FIXED rate for 25 years, 25/25 fully amortizing.  No rate resets and no balloon payments. 5,3,1 prepayment penalty is in place for the first three years.  This is for owner occupied properties where the borrowers business will occupy at least 51% of the rentable square footage.  While this is an SBA product this is a program unique to this bank.  Nebo Capital has a strong relationship with the Southern California SBA Office which is actively sourcing new deals in the $1 Million to $5 Million loan size and can do deals nationally.

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

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.

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.

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 - Unique Recapitalization Financing

Nebo has identified a Southern California Investment Firm with a unique financing program for equity recapitalizations in the $500,000 - $5,000,000 range.

Program Parameters:

  • A recap tool for existing ownership or JV equity for new ownership structures.
  • For assets located in primary and secondary markets in California, Texas, Colorado, Arizona, Nevada, Oregon and Washington.
  • The investment capital is cash flow driven, so deals must provide for preferred return to be paid current.
  • Typical amount of investment capital per transaction is $500,000 to $5,000,000.
  • Product preference – Office, Medical Office, Industrial, Retail, Mini-Storage and Multi-Family.
  • Ownership must be strong and experienced such that it can demonstrate its ability to execute the prescribed business plan for the asset.
  • The equity investment is secured by a partnership interest reflective of its share of the total current equity in the asset.
  • Terms of each transaction will vary, but a typical structure will require an 8% to 10% preferred return to be paid current annually from cash flow during the hold period, and upon a refinance or sale, a priority return of the investor's equity, plus additional proceeds to achieve an IRR of 15% to 20% (inclusive of cash flow).

Capital Source of the Week - Fast Moving Bridge Lender

Featuring a private equity fund management firm which specializes in short-term, first mortgage financing for all commercial property types.  As of late, their niche products have been Discounted Payoff financing for loan workouts, note acquisition financing for investors that purchase non-performing loans, and REO acquisition financing.  Transaction sizes from $1 million to $25 million.  They are a direct, balance sheet lender with discretionary capital for investment. 

  • National coverage in all primary and secondary markets; they will also consider tertiary markets for transactions with strong fundamentals
  • Ability to close transactions in as little as five business days, average turnaround is 10 business days
  • Cash-flow driven underwriting and ability to provide advance funds for capital expenditures, tenant improvements, and leasing commissions

Nebo Blast - ULI Fall Meeting Recap

Nebo Capital attended the Urban Land Institute’s Fall Meeting in Denver last week.  The conference was upbeat and positive, in stark contrast to the last several years.  The people we met were developers and investors who either had deals in the pipeline or were looking for new opportunities.  None were sitting on their hands waiting for more improvement in the market.  The collective perception was that the market has already bottomed, the recovery will continue beyond 2013, and now is the right time to be generating a deal pipeline and acquiring land for development.

The conference sessions included the real estate needs of aging parts of the population, the demands of Gen Y and other younger demographics, the status of foreign markets, and leadership in commercial real estate, just to name a few.  The general consensus is that credit is loosening slowly but surely for the right deals with the right sponsors.  Institutions are aggressively chasing core, which will has caused significant cap rate compression for the most institutional assets in the strongest markets.  There was even some discussion of possible overbuilding in certain core markets by 2014.  We should continue to see institutional capital expanding its appetite for risk to deals outside of just the best of the best.  CMBS is back in force and we should expect to see the availability of CMBS debt continue to grow over the next several years, which will push conventional lenders back into construction and bridge debt as the yields on high quality stabilized assets are compressed and competition increases.

Opportunistic capital is readily available for distressed asset acquisition, partner buyouts, and higher yielding transactions that have a transitional component, good real estate, and a solid business plan.  Value-add deals have been difficult to finance over the last few years but are becoming more attractive to the capital markets as the industry recovers.  Strong sponsors in good markets should expect to see their deals capitalized with conservative senior debt and a gap-financing component such as mezz or preferred equity.

The conference was well attended, the mood lively and optimistic, and the participants are doing deals.  This reflects what we’re seeing in the market, a recovery that is gaining momentum and creating opportunity for sponsors with good deals.  At Nebo we see our deal flow increasing in volume and quality.  It looks like 2013 is shaping up to a very busy year.

Capital Source of the Week - New Private Short Term Bridge Lender

A knowledgeable, Southern California real estate family with plenty of cash liquidity and an appetite for opportunities with a story that is quick and easy to understand has started putting money out for private real estate secured loans.  They specialize in very short term and complicated situations needing $1MM to $10MM or more.  Pricing is driven more on a whole dollar return basis and they like terms of less than a year.  They can look at multiple assets (including notes) as collateral and can use some level of non-real estate credit to get to the dollars needed.  Any major food group property west of the Rockies is preferred.

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

Nebo Closes $6.35 M LOAN

Nebo Capital arranged financing for the funding of a $6,350,000 loan on
two existing neighborhood shopping centers in Nevada.  The borrower was
able to negotiate a short sale with his conventional lender after a
maturity default resulting in a significant discount.  The lender
successfully funded 88% of the discounted note purchase and closed the
transaction before the conventional note holder could foreclose on the
properties.  This transaction significantly increased the borrower's equity
in the assets.