Lexington Equities- Opportunistic Capital
With more than $150 Billion in commercial real estate loans maturing this year, there is no doubt that the write-downs by lenders, hard money, and bridge loan funds will be monumental. We are already seeing discounted debt buy-backs and other debt being offered at a discount through lender work-outs and other debt restructurings in the commercial real estate arena.
Along with epic losses just about to hit the commercial real estate market, there are always vulture investors and newly formed bridge funds that are actively pursuing deals that make sense. Based on recent observations and extensive research, real estate debt and bridge loan funds that were recently capitalized or formed are actively pursuing non-performing debt with a special emphasis on debt that is being offered at a discount.
The underlying commercial real estate asset classes can range from plain vanilla income producing assets, semi stabilized assets; low DSCRs, or non-stabilized assets. Currently in the market now, the bridge funds and newly formed CRE funds consider make sense non-stabilized deals to be fractured CRE deals that are 75-90% completed that are in need of interim or gap financing while waiting for completion of construction and lease-up.
Our investors are well capitalized and are looking to fund CRE deals that a lender is offering a discount buy-back on senior debt. In essence our institutional investors are willing to purchase discount senior construction debt, extend additional capital for necessary construction and for the lease-up stage. The spread between the original debt balance amount and the newly discounted debt amount should be at least 25%, though ideally 40-60% off the original face amount- essentially this is a developer or builder "bail-out" type of financing.
Along with our investors, we honestly believe that there is less risk associated for bridge situations in which there is a discounted debt buy-back and only 20-30% of construction remaining. In addition, our investors can be extremely competitive for financing of stabilized CRE deals as well.
For more information or to hear more about our investor's appetite for commercial real estate financing deals in this climate within metropolitan areas in the US, you can email me directly at Sam@LexingtonEquities.com.
Lexington Equities is a Manhattan based distressed debt and commercial real estate principal investor and advisory firm with special exposure to the distressed debt capital markets. Lexington Equities utilizes family funds and third party capital for private commercial lending in isolated hard money transactions. Financial strength, confidence, creativeness, and full capacity to complete time of the essence deals when execution is critical.
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