As Rates Rise, the Appeal of Real Estate Bridge Loans Grows

Over the past few years, the story with allocators investing in private equity had a rich-man, poor-man quality. A spate of big distributions left cash on hand but nowhere comparable to invest it. Real estate emerged as a go-to asset class, driving up valuations alongside a growing public demand for properties, which only added to an already frothy market. Now, as interest rates are beginning to rise, investors are wary of a correction and turning to parts of the real estate debt market as a hedge.

商业房地产桥梁贷款是这样的一个树篱。桥梁贷款是一种临时融资，填补了差距，而开发人员对属性进行更改，如装修或重新估算。从历史上看，桥梁贷款一次已经完成了一次交易，开发人员根据业务计划和12至18个月的时间表进行筹资，以进行还款。传统的银行贷款人已经进出了这个市场，因为承保人可能很棘手：在申请融资时，过渡的建筑经常有负现金流量，这是一个艰难的卖空。因此，非银行贷方已经介入满足需求 - 以略微高于银行的利率。这些非银行贷款人开始通过提高短期债务资金来更系统地探讨桥梁贷款。

On January 4 Los Angeles–based Mesa West Capital closed its fourth and largest fund to date, at $900 million. The vehicle will originate short-term loans ranging from $20 million to $300 million. Mesa West was one of the first managers to focus exclusively on commercial real estate debt and has since deployed more than $11 billion of loans. “When we launched our first fund in 2005, there weren’t that many institutions, beyond insurance companies, in this space. But we’ve seen more institutions, and pensions specifically, come around to the asset class,” says Mesa West co-CEO Jeff Friedman. Both the San Joaquin County Employees’ Retirement Association and the Indiana Public Retirement System disclosed commitments to Mesa West Real Estate Income Fund IV as part of their real estate allocation. Other investors include corporate pensions, endowments, foundations, and sovereigns.

Friedman says the current fundraising environment is strong for firms that have an existing track record, and he expects that 2017 will be a solid year in terms of lending volume. “This is a demand that always exists,” he contends.

Christopher Acito, founder, CEO, and CIO of New York–based limited partner Gapstow Capital Partners, agrees, arguing that 2017 looks like a particularly interesting year for bridge financing. “This is an industry that is now turning to institutional investor capital as its primary source of financing,” he says. Gapstow invests in both credit managers and assets and has committed approximately $100 million to bridge lending and other small-market commercial real estate debt strategies.

According to Acito, in addition to the consistent demand for new bridge loans from developers, 2017 will also see a wave of ten-year commercial-mortgage-backed securities (CMBS) vehicles, which were put together just before the financial crisis, hit maturity. Many of those vehicles will need refinancing, and traditional banks will have to contend with newly implemented risk-retention rules, which could limit new CMBS issuance, creating an opportunity for nonbank lenders to step in.

At the upper end of the market, leverage limits on banks are also likely to keep the advantage with nonbank lenders. “There is a real void when it comes to moderate-leverage large bridge loans, and we’ve been able to step in and do those deals,” says Boyd Fellows, managing partner at San Francisco–based Acore Capital. Fellows adds that demand is spread consistently across major cities and large metropolitan areas. “We are confident that this will continue over the next one to two years,” he says.

尽管有这张玫瑰色的照片，一些经理仍然是哲学的哲学，关于广泛的机构投资将在近期进入。纽约的哈德森省资本共同管理合作伙伴David Loo and Richard Ortiz，自2011年以来将成为LP的Gabstow。这一关系从基本上是一个单独托管的帐户，这是哈德森团队使用的建立与其他感兴趣的LPS。据LOO介绍，即使投资者来临，他们仍然很多，让他们感到满意。“我不认为传统的核心类 - 一位投资者突然将开始在频谱上进入次级债务，”他说。“但是在这个空间比以前更兴趣。”

There are advantages for both developers and investors that opt to go the private lending route: Borrowers are assured that the transaction will close, and debt investors have the security of a path to recovery even if a deal goes sideways. The transactions are also somewhat difficult to source, creating natural barriers to entry. “There are shoe leather costs with this type of lending,” Gapstow’s Acito says. “You have to be local; it requires loan origination and networking. You can’t look up these deals on a Bloomberg. But we think it’s worth it.”