PROFESSOR'S CORNER

From the Desk of Professor Eyzenberg
With various lockdown philosophies governing different states, the market recovery has not been uniform. However, the capital markets have continued to heat up with anticipation of a return to normalcy being an inevitability. Liquidity returned for select Retail opportunities (necessity & grocery) as well as Hospitality (resort and drive-to leisure), while demand for Multifamily and Industrial continued unabated.

As is the norm when greed trumps fear, the capital markets got out ahead of on-the-ground fundamentals. To fill the gap, new structured financing products continued to make their way into the stack. More cities and states enacted C-PACE legislation, allowing the energy efficiency-focused money to flow into real estate. However, lenders seem to have divided themselves into two camps of philosophy when it comes to C-PACE (not unlike ground leases).

On one hand (primarily), those from the securitization world viewed the whole C-PACE loan amount as senior to theirs and thus reduced proceeds to a target LTV/LTC criteria. On the other end (primarily), balance sheet lenders accounted for C-PACE payments (special assessment taxes) as a long-dated, though temporary, increase in operating expenses and therefore adjusted their sizing on debt yield and/or DSCR hurdles.

This meant that assets that were built to an attractive, untrended yield on cost (6.5%+) could absorb the higher tax assessment and therefore would not have senior loan proceeds reduced.

Our company, sitting at the crossroads of senior debt and C-PACE, takes the viewpoint that C-PACE should be treated as an operating expense. Thus, Eyzenberg GreenCap has partnered with ReedsBay to provide a full-stack solution combining C-PACE with senior debt, adjusted only for operating costs and not for the C-PACE loan amount. We believe that the non-acceleration nature of C-PACE makes it distinctly different than senior debt and therefore should be viewed differently. Read more about this below. - David Eyzenberg (Adjunct Professor at NYU Schack & UM Herbert Business School)

RECENT CLOSINGS

Select completed transactions
$6MM Acquisition | Land | Panama City, FL
Structured and placed a first mortgage construction loan to build the initial 100 units of a 130-unit community.
$45MM Single-Family Rental | Recapitalization | Huntsville, AL
Structured and placed permanent financing on this recently completed single-family rental housing project. Financing included allocations for lease-up and stabilization to achieve full value.
$32MM Single-Family Rental | Development | Panama City, FL
Arranged construction financing for a new 79-unit Single-Family Rental-style community in Panama City Beach, FL.
$46MM Single Family Rental | Development | Panama City, FL
Sourced and structured a non-recourse construction loan for a build-to-rent, 225-unit Single-Family Rental style community located in Panama City, FL.

PROPRIETARY CAPITAL SOLUTIONS 

Spotlight on Select Programs
Logo Eyzenberg GreenCap
Eyzenberg GreenCap is a partnership between Eyzenberg & Company and Greenworks Lending, uniquely dedicated to funding commercial real estate transactions through C-PACE. Click here to learn more about the program and your project's eligibility.

Eyzenberg GreenCap: C-PACE Funding Parameters

Transaction Scenarios:
  • New development, acquisition with a heavy renovation component or recapitalization in tandem with a redevelopment of the property
Property Types:
  • All commercial property types and select alternative asset classes
Funding Size:
  • $1MM-$150MM+, smaller requests reviewed on a case by case basis
Recourse:
  • No repayment or carry guarantee, completion guarantee burns of at TCO
Pricing:
  • % to 6.5%, dependent on term, location, use and leverage
Term & Amortization:
  • Self amortizing (no balloon) with terms up to 30 years (based on estimated useful life of the improvements
Max Lien-to-Value:
  • 90% (combined debt) for new developments / 95% for retrofits
Max LTV/LTC:
  • 25% of as completed value / 30% of total capitalized budget for new developments (higher for retrofits)
Prepayment:
  • No lockout but subject to a pre-negotiated fee
Geography:
  • Currently active in 24 states and D.C. States include: CA, CO, CT, DE, FL, IL, KY, MA, MD, MI, MN, MO, NE, NV, NY, OH, OK, OR, PA, RI, TN, TX, UT, VA and WI.
Reeds Bay Investment Group is an investment management firm specializing in income-oriented investments that leverage our expertise, process, and access to middle-market CRE investments throughout the United States. Click here to view our project guidelines.

ReedsBay: Project Capital for Middle Market Commercial Real Estate

Property Type:
  • All major property types considered
  • Primary: Multifamily, Mixed-Use, and Office (select situations)
Loan Size:
  • $1-15 million (larger loan sizes considered on a case-by-case basis)
Leverage:
  • Up to 85% (additional proceeds available in select situations)
Use: (All include an option for future funded TI/LC and CapEx facility)
  • Acquisitions
  • Developments
  • Repositionings
  • Recapitalizations
  • Note Financings
  • Special Situations
Available Structures: 
  • Senior Secured Loans
  • B-Notes
  • Mezzanine Debt
  • Preferred Equity
Geography:
  • Domestic growth markets and locations with identifiable demand drivers and inventory supply constraints
Pricing:
  • Variable: Starting at LIBOR + 700 bps with a risk-based floor
  • Fixed: Starting at 8.0%
  • Interest-only
  • Market competitive origination, exit, and extension fees adjusted to loan size, timing, and complexity
Term:
  • 6 months to 3 years with extension option available
  • Prepayment available, subject to fees and/or minimum return requirements
Recourse:
  • Non-recourse, except for standard carve-outs & carry/completion guarantees

CURRENT OFFERINGS

Select Deals in the Market Seeking Capital
Construction Loan 
$140MM | Hotel | Recapitalization | New York, NY
Construction Loan
$6.7MM | Multifamily | Development | Newton, NC
JV Equity
$16MM | Single-Family Rental Housing | Acquisition | Philadelphia, PA
Construction Loan
$14MM | Multifamily | Development | Aubrey, TX
Construction Loan
$11.5MM | Multifamily | Development | Concord, NC
Select Deals Seeking Developers
207-Unit Co-Development
$45MM | Multifamily | Development | Pensacola, FL
400-Unit Leasehold Development
$62MM | Multifamily | Development | Bonita Springs, FL
366-Unit Co-Development
$21MM | Multifamily | Development | Panama City

RECA CORNER

Real Estate Capital Alliance (RECA) Q1 2021 Production Statistics

Eyzenberg & Company is a proud member of the Real Estate Capital Alliance (reca.us). RECA members arranged over $4 billion in capital in 2020. Below are the complete RECA production statistics for Q1 2021.