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Arc & Co. & Delancey Real Estate have closed a senior secured three-year, fixed rate £19.5 million facility to assist a London-based developer with the acquisition of an existing office in St James’s. The deal is expected to be the first of many in a market which Delancey believes will be an opportune time for its lending business, given the current retreat of traditional financing sources which are further increasing the need for alternative lenders. The St James’s based property in London’s West End is a prime freehold, 16,000 sqft mixed-use asset, and the acquisition financing offers a rare opportunity for exposure to a freehold asset in the area’s sub-market. The developer intends to carry out a comprehensive refurbishment of the property once proposed planning has been achieved. The debt package represents a loan-to-value of c. 70% with the ability for the developer to request capital for the refurbishment. https://lnkd.in/eTj4dm58

Are these institutional class A buyers overpaying!? DEAL 1 – announced August 2024:  $964M for 3,572 Units = $270K / door Equity Residential (EQR) is acquiring from Blackstone (BX) – assets in Dallas, Denver & Atlanta The portfolio of “high-quality, well-located properties” will be acquired at “pricing that is attractive compared to replacement costs.” - Alec Brackenridge, Chief Investment Officer at EQR My Take -> This is a ‘basis play’ with details forthcoming, but at first take it appears to be a good deal. DEAL 2 – June 2024: $2B for 5,200 Units = $400K / door KKR purchased from Quarterra (a subsidiary of Lennar: LEN) 18x mid-rise assets in CA, WA, FL, TX, GA, NC, CO & NJ "… we expect the year one yield on this portfolio to be in the low 4% range… it's the type of deal that is going to put some pressure on our near-term ROEs for the benefit of longer term profitability." - Rob Lewin, CFO at KKR “The influx of new supply is likely to taper off after 2025, at which point we are optimistic about rent growth given the structural shortage of housing and unfavorable cost dynamics for new construction” – Ralph Rosenberg, Global Head of Real Estate at KKR My Take -> A low 4s cap rate for multifamily with negative leverage in Year 1, banking on future growth & value below replacement cost, at a time when most believe Class A multi cap rates have settled around 5%. They are making a bet on the low supply that's coming in 2025-2026. If you'd like to follow along with our investment offerings, check out our website in the comments.

"Thorofare Secures $26M Refinancing for Newly Constructed Apartments" Read the full article below..

Exploring the Rise of Mixed-Use Properties in Commercial Real Estate At Bridging Ventures Group, we stay ahead of market trends to provide our clients with the best financing solutions. Recent data reveals that mixed-use properties have climbed into the top five commercial broker searches for the first time since January. But what exactly are mixed-use properties, and why are they gaining popularity? What is a Mixed-Use Property? A mixed-use property combines two or more distinct uses within the same structure. Common examples include buildings with residential units above commercial spaces like shops or offices. This configuration offers versatility and potential high returns for investors. Benefits of Mixed-Use Properties: Convenient Living: Residents enjoy proximity to amenities such as supermarkets, gyms, and restaurants. Prime Locations: Typically located in central areas with excellent public transport links. High Footfall: Commercial tenants benefit from increased customer traffic in busy urban centres. Attractive Investment: Investors can earn high rents from both residential and commercial tenants, while potentially saving on tax obligations. Specialist Funding Solutions: Securing finance for mixed-use properties can be challenging with traditional lenders. However, Bridging Ventures Group offers tailored solutions including: Bridging Finance Specialist Development Finance Commercial Buy-to-Let Loans Secured Business Loans To learn more about how we can support your mixed-use property investments, visit www.bridgingventures.co.uk or call 0208 506 6050. #MixedUseProperty #CommercialRealEstate #BridgingLoans #PropertyInvestment #BridgingVentures

Terrific. What size loans bridge and permanent ?

As distress builds in the commercial real estate sector, opportunistic buyers are making their move. Higher debt service costs have slammed owners who bought commercial real estate using adjustable-rate financing (particularly owners of older office buildings that are also contending with remote and hybrid work culture). Lenders -- many of whom were previously willing to provide loan extensions to keep projects afloat -- are now facing increasing regulatory scrutiny and are taking a harder line with property owners. This is opening the door for investors with cash to buy commercial properties at large discounts or to provide rescue capital in exchange for preferred returns on favorable terms. "Overall, global real-estate funds operated by private-equity firms were sitting on $544 billion in cash as of the second quarter of last year—a record level and up from $457 billion at the end of 2022, according to data firm Preqin. The largest increase was in so-called opportunistic funds, which often search for distressed opportunities."

Let’s talk about Real Estate. This industry is heavily hit by slipping prices for private but in particular for commercial real estate due to increasing interest rates which make financing of real estate projects significant more expensive. Insolvencies have been picking up and project developers were hit first with some regional impact.   But we also could observe that an increasing number of large real estate portfolio companies are struggling. One major reason is the debt burden from past acquisitions and projects; highly leveraged real estate financing with low interest rates and increasing real estate prices were the big gamble and an opportunity for investors to make big money. The party is over and the situation has turned upside down – higher interest rates and decreasing prices for real estate assets: This is more than a hang over after a party night. As many financings will come due within the next 3 years the need to refinance is high. It will not be an easy approach just to deleverage by selling real estate assets now as the low price level will come even more under pressure in some areas, as real estate assets from insolvencies will be - more or less - thrown on the market to get some pay down of creditor’s claims.   However, the various groups of lenders with different security positions and consequently agendas in these cases need to be rational and seek mutual agreements and in doubt have to conduct a holistic restructuring approach including all relevant stakeholders and considering shareholders to obtain the option of a value preserving or even better outcome solutions. There will be cases that values could be diminished significantly (in particular in a fire sale) if each lender just try to monetize their claim at a maximum. It is obvious that mutual solutions in these situations need to be orchestrated by an independent expert – that is the dedicated playground of a Chief Restructuring Officer.

Shift in Preferred Equity & Mezzanine Financing for Hotel Refinancing Carlos Rodriguez, CEO of Driftwood Capital, highlights significant changes in the role of preferred equity and mezzanine financing in the hotel refinancing sector. Previously used to bridge the 70-85% loan-to-value space, these financings are now critical for loans above 50%, filling the gap left by more conservative senior loans. Driftwood Capital, a vertically integrated real estate firm, is leveraging this shift to work with higher-quality borrowers and increase its exposure to top-tier operators. The firm has notably expanded its refinancing deals, targeting $15-$25 million, and up to $50 million. Despite a slowdown in new construction financing, Driftwood's "white knight" strategy injects necessary capital for struggling developers, boosting their $1 billion pipeline. Borrowers are adapting creatively, often resorting to debt funds for senior loans due to their efficiency, despite higher costs. Additionally, Driftwood is ramping up EB-5 investments, offering a cheaper but time-intensive capital source. Thanks as always, Jeff Weinstein, for the coverage. #HotelInvestment #MezzanineFinancing #PreferredEquity #RealEstateFinance #DriftwoodCapital https://lnkd.in/gJ_DY9mi

Thursday, Bloomberg reported that BREIT's sale of student housing properties in April included a lot of transferable, below-market financing. In addition, it appears that, unsatisfied with first round bids, BREIT offered seller financing at below market rates and encouraged potential buyers to resubmit bids. Bidders including KKR submitted higher bids as a result of the seller financing. When BREIT announced the sale in April, it touted a premium of 7% to its marks and claimed the sale vindicated its valuations. Nonsense. The $800 million in transferrable below-market financing and seller financing almost definitely account for more than 7% of the $1.64 billion transaction price suggesting BREIT was overvaluing its student housing properties - the opposite of the claim it is making. Friday, BREIT announced that its May 31, 2024 NAV is $14.15 - down slightly from March and April and roughly where it was 2.5 years ago. Reading between the lines, which we have to do because Blackstone is not transparent, problems at BREIT keep getting worse. Count on Blackstone to reimpose redemption limits and prolong BREIT's slow collapse.

What an extraordinary month July was for CapitalRise with our highest number of New Deals completed totalling £50m! By far and away our record month. This also coincides with our financial year end where we will be able to report a significant Growth in Lending Origination from the prior year and setting another record milestone for our business. Impressive results given this is set against a backdrop of what's undoubtedly been a very challenging year in the development finance market, where transaction volumes have been low, deal execution times have been painfully slow and with continued volatility around build costs, residual land values, interest rates and the challenges with the planning process. Here's where we deployed the Capital, which demonstrates the range of support we are providing to our developer borrowers and debt advisory partners in the market. ▫ £8.3m Ground Up Development Loan for 2 new build luxury homes in Wimbledon ▫ £5.7m Development Exit Bridge Loan with Equity Release on new build homes in Colchester ▫ £1.7m Pre-Development Land Bridge Loan to support planning for High Value single dwelling in Ascot ▫ £7m Finish & Exit Bridge Loan for 3 apartments in Chelsea ▫ £6.3m Lease Enfranchisement Bridge Loan in Mayfair ▫ £10.3m Ground Up Development Loan of 5 Apartments in Chelsea ▫ £8.3m Development Loan for 28 unit Serviced Apartment scheme in Bloomsbury ▫ £1.6m Pre-Development land bridge Loan to support planning for 2 luxury dwellings in Emerson Park ▫ £400k Mezzanine Loan for an airspace development in West London A great team effort from across the CapitalRise business from Origination, Credit Risk, Capital Markets, Investor Relations and Finance. With todays base rate reduction, sitting alongside a low inflationary environment, I think we are very well placed to support increased demand and activity across London and the Southeast for the remainder of 2024 and into 2025. Raf Chowdhury | Katy Katani | Imogen Williams | Edward Groves | Aadam Samiullah | Max Brady #realestatefinance #propertydevelopment #developmentfinance