SENIOR DEBT

An efficient debt execution is one where the financial strategy and structure are complementary to the business strategy of the borrower. The position of an asset in its life cycle will dictate the structure and nature of the corresponding financing.

Besides rate, there are many nuances to be negotiated.

We source, structure and close the following senior debt loans:

  • •  Construction loans for development deals

  • •  Permanent financing for stabilized assets

  • •  Bridge loans for transitional opportunities

  • •  Credit facilities for fund or loan leverage

$40MM Ground Lease Portfolio | Credit Facility | Virginia

 

We maintain ongoing relationships with a large variety of senior debt providers including:

  • Commercial Banks / Credit Unions

  • Life / Casualty Insurance Companies

  • Pension Plans

  • Credit Companies

  • Mortgage REITs

  • Real Estate Private Equity / Hedge Funds

  • Union Funds

  • CMBS/CDO/CLO/CMO Conduits

  • SBA/SBIC

  • HUD/FNMA/Freddie Mac in the US & CMHC in Canada

 

$38MM Retail Shopping Center | Permanent Loan | Miami, FL

  

Construction loan nuances to be negotiated:

  • Level of guarantees (completion and/or principal/interest)

  • Presale/Preleasing requirements

  • Lockout/Prepayment clauses

  • Timing of equity contributions by the sponsor

  • Release provisions

  • Amount and allocation of budgeted contingencies

  • Additional credit support

  • Treatment of land equity vs. cash investment

  • Syndication requirements

  • Timing and percentage of retainage for contractor and subs

  • GMP versus other construction contracts

$81MM Intown Condos/Rentals | Construction Loan | Miami, FL

  

Bridge and permanent loan nuances to be negotiated:

  • Reserve requirements

  • Escrow calculations

  • Amortization terms

  • Interest only periods

  • Discount points

  • Debt yield requirements

  • Loan maturity

  • Prepayment penalties

  • Assumability & assignment options

  • Holdbacks vs. earn-out future funding

  • Title, estoppel, insurance requirements

$20MM 1st Phase Office to Hotel Conversion | Bridge Loan | Miami, FL

STRUCTURED CAPITAL

The Capital stack has evolved over the years with the primary change being last dollar leverage points dictating pricing and structure.

Besides leverage and pricing, the primary difference between senior debt, mezzanine financing and preferred equity lies in what collateral is required.

  • Senior Debt – Mortgage against the property, goes through judicial foreclosure

  • Mezzanine Debt – Partnership interest of the borrowing entity, UCC1 foreclosure

  • Preferred Equity – Owns a senior position and dictated by operating agreement

We source, structure and close the following types of structured capital transactions:

  • Junior/ Senior Mezzanine Loans

  • Preferred Equity

  • Full/partial accrual pay options

  • Long-term co-terminus loans

  • Fixed/floating/participating structures

We maintain ongoing relationships with a large variety of structured capital providers including:

  • Insurance Companies

  • Real Estate Funds

  • Private Equity Funds

  • Hedge Funds

  • Crowdfunding Platforms

  • EB-5 Regional Centers

  • Israeli Bond Offerings

  • Public & Private REITs

  • Private Family Offices

  • Investment Banks

$74MM Rental Tower | JV & Preferred Equity/Bridge & Construction Loan | New York, NY

Equity

Unlike the general debt market, the equity arena is characterized by subtle, yet substantial differences between seemingly comparable “market” rate deals. It is imperative to have a well-run placement process to identify capital partners comfortable with the sponsor, market, strategy and risk level of a project. Our approach involves thoroughly understanding the Sponsor’s business goals for the project and then underwriting the deal with a matching capital strategy in mind. After evaluating every angle, we present our clients with multiple options and help identify and close with the most appropriate source.

 

A transaction’s size (>$10MM>), risk profile (core, core plus, value added or opportunistic), asset class and geography will dictate the appropriate constituency to whom the deal should be presented to. In the capital stack, equity has the greatest variation of economic structures and issues of control.

 

 

We source, structure and close the following types of Equity transactions:

 

    • Co-GP/LP passive asset level

    • Entity level common equity or convertible debentures

    • Programmatic / separate account capital

    • M&A – joint venture structuring

    • Fund, entity and asset level re-capitalization

    • Senior-subordinate / pari passu structures 


We maintain ongoing relationships with a large variety of Equity providers including:


    • Insurance Companies

    • Pension Funds

    • Endowments

    • Sovereign Wealth Funds

    • REITs

    • Family Offices




    • Merchant Banks

    • Real Estate Funds

    • Private Equity Funds

    • Hedge Funds

    • Crowdfunding Platforms

    • EB-5 Regional Centers



$16MM Retail Shopping Center | JV Equity & Permanent Loan | Lake Charles, LA

$18MM Retail Shopping Center | JV Equity & Bridge Loan | San Antonio, TX

ESOTERIC STRUCTURES

 It is not always possible to utilize off-the-shelf structures for unique opportunities. Eyzenberg & Company (either directly or via strategic affiliation) offers several non-traditional options for capitalizing real estate transactions including:

  • CTL structures for single-tenant credit deals

  • Bifurcated A/B notes

  • Tenant improvements/credit financing

  • Corporate trade for real estate swaps

  • EB-5 capital

  • Israeli Bonds

GROUND LEASE

Eyzenberg & Company represents Anika Equities (our founder is also a partner in “Anika Equities GLF”), which is seeking opportunities to create and purchase ground leases on cash-flowing commercial real estate in primary and strong secondary markets. Anika Equities GLF will purchase the land under most asset types, with a minimum investment of $10 million and no maximum. Additionally, Eyzenberg & Company can assist the seller in obtaining competitive leasehold financing.

The General benefits of a bifurcation transaction include:

  • In a refinance/recapitalization scenario, the seller/leaseholder repays existing debt and repatriates equity while continuing to benefit from the future upside of the operating asset

  • In an acquisition scenario, the seller/leaseholder achieves higher “all-in” leverage utilizing a ground lease/leasehold financing combo at a lower blended cost than a senior/mezzanine loan option

  • Unlike a traditional senior/mezzanine stack where all debt usually expires coterminously, a ground lease provides low cost permanent capital with no immediate balloon risk

  • Tax advantaged execution allows the seller/leaseholder to depreciate 100% of the leasehold improvements and deduct 100% of the ground lease rent

Typical Terms and Structure are as follows:

  • Anika Equities GLF buys the ground – taking an unsubordinated fee position. The property is then bifurcated into:

  • Leased Fee ownership of the ground (owned by Anika Equities GLF)

  • Leasehold ownership of the improvements (owned by the Seller)

  • Purchase price of leased fee position –is approximately 30% – 40% of the property value

  • The ground rent – is fixed at a significant discount to the cap rate of the overall asset with fixed annual increases of approximately 2% – 3%

  • Buy-back options – deals can be structured with imbedded options at very favorable terms

  • Leasehold financing – Eyzenberg & Company can assist the Seller in securing senior secured leasehold financing (up to 75% LTV)