New bridging loan facilities link projects to financing

There has been a miniature boom in new Bridge Street lending facilities. On Monday, NewPoint Real Estate Capital announced its multi-family bridging loan program. The objective is tailor-made bridging loans for “short-term interim financing for the acquisition, refinancing or recapitalization of multi-family investments”.

The loans will range from $ 5 million to $ 50 million, for terms of up to five years on “light to moderate transitional multi-family properties” in the United States. The company also claims features such as prepayment arrangements, in-house service for future funding and drawing requests, and “competitive pricing and waived exit charges when loans are refinanced through one of the loan options.” NewPoint’s ongoing funding ”.

NewPoint then followed up this announcement with the announcement of the acquisition of certain assets from Housing & Healthcare Finance (HHC Finance). These include FHA’s multi-family origination and healthcare business and loan services portfolio.

Meanwhile, Liberty SBF announced “a new bridging loan product for mid-market CRE investors who previously had few funding options.” Non-recourse loans will cost between $ 5 million and $ 15 million at terms of two to three years and up to 80% of the loan-to-cost ratio at L + 450 rates. There is also a broker incentive program that includes fees for referral clients.

Bridge financing has played an important role in some areas. For example, since last year, developers of large multi-family projects have used bridging loans to keep a project afloat while developers seek to stabilize it and achieve positive cash flow.

Another reason for a jump in bridging loans is value-added investors. “The growth in rents has supported transitional business plans in which sponsors purchase properties with the idea of ​​investing additional capital in those properties or executing a plan to increase rents.” Alex Cohen, CEO of Liberty said in October 2021. “We are seeing a strong demand for bridging from borrowers who are executing these types of business plans. “

There is also growing interest in the bridging loan market. The investment and property management firm Harbor Group International announced in May its first guaranteed loan obligation, or CLO, on a collection of bridging loans on multi-family assets across the United States in a global deal worth approximately $ 558 million.

In August, Reigo Investments, an Israel-based global investment firm working with Cantor Fitzgerald, announced the closing of a $ 100 million residential bridge loan securitization. What made this project unusual is the use of artificial intelligence and data analysis analyze past loan decisions to build predictive systems. The company identifies hundreds of metrics and tries to correlate them with loans to determine which ones are likely not to default, which might default but are likely to collect the money, and which would likely default and not. would not return investor funds.

Priscilla C. Carnegie