UC Funds 2017 recap
UC Funds saw an ongoing wave of success in 2017. The banner year marked the debut of our groundbreaking first mortgage bridge loan UC GO, as well as a series of exciting closed loans and grand openings. Our CEO Daniel Palmier was also called upon by top media outlets to provide expertise on commercial real estate trends, as well as UC Funds’ strategies and innovations.
Here’s a sampling of our biggest news from 2017:
The debut of our revolutionary new mortgage product
UC Funds gained industry-wide attention in July when we unveiled UC GO, the lowest rate, most competitive commercial mortgage product available in commercial real estate today. Daniel Palmier discussed the loan’s significant appeal in an article published by Commercial Property Executive. “In the current market environment, commercial real estate developers and owners want the UC GO product because of its extreme pricing competitiveness, aggressive proceeds, non-recourse structure and flexibility, without the bank restrictions and contingencies.”
The loan has garnered the interest of borrowers industry-wide, due in great part to its advantages over similar products on the market, most of which provide between 60 and 75 percent loan to value (LTV). UC GO offers an 85 percent LTV and 0.5 debt service coverage ratio, which is twice as competitive. “For investors, UC GO offers the superior returns of equity with the lower risk of debt,” explained Palmier during an interview with the Boston Real Estate Times. He stressed the benefits of UC GO’s approval and speed, which are critical for developers to ensure that their assets stay profitable while continuing to stabilize.
We have multiple UC GO deals are in the pipeline, with two already closed. Through UC GO, UC Funds provided a $24.4 million first mortgage loan to refinance $22.5 million of existing debt on a 333,193-square-foot retail center in Port Richey, Florida. The property, Embassy Crossing, is a 30.7 acre site located at 9550 U.S. Highway 19. UC Funds provided the sponsor, Aaron Berger, with a $2 million return of equity with $6 million of sponsor equity remaining in the deal. Berger was attracted to UC Funds due in great part to UC GO’s flexible pricing, which allotted $1 million for tenant improvements and leasing commissions.
We also a closed a $5.8 million UC GO first mortgage bridge loan for the refinancing of an 89,008-square-foot Kohl’s retail building within Richmond Ranch, a shopping center in Texarkana, Texas. The property is located at 2525 Richmond Road in Bowie County, which spans the border of Texas and Arkansas. The sponsors, Martha Abbot and Steve Avars, have been involved with Richmond Ranch for nearly two decades. Thanks to UC GO’s speed and flexibility the underwritten property value of $8.1 million yielded a 71.6 percent LTV on UC Funds’ fully funded loan amount. The non-recourse loan represents $65 per square foot of the property, which is 50 percent lower than comparable trades.
The new normal in commercial real estate
Daniel Palmier’s extensive knowledge of the industry has come in handy this year, with many middle market developers and investors turning to non-traditional lenders for financing, in response to tightening bank restrictions. “As the market for non-traditional lenders has grown, pricing has dropped to be on par with conventional lenders, while at the same time offering the added benefits of non-recourse, flexibility, and quicker closing timeframes,” wrote Palmier for Mid Atlantic Real Estate Journal’s Fall Preview. “Today, even institutional real estate investors are turning to companies like ours for financing to take advantage of the added benefits and competitive capital pricing,” he continued.
Palmier also addressed new strategies being embraced by investors in an interview with National Real Estate Investor. “We have a lot of borrowers that we have financed over the years that are seeing [lower] return on the equity side of the business, and they are now investing in UC Funds on the debt side.”
Palmier offered insight on the competitive advantage of commercial lenders at Commercial Observer’s Financing Commercial Real Estate Forum, where he sat on a distinguished panel: Alternative State of Mind: A look at the state of the alternative lending market. Palmier offered his opinion that alternative lenders are a subset of hard money lenders. “You don’t break too many legs as an alternative lender,” he said, noting the difference between the two.
A surge of closings and grand openings
UC Funds closed a plethora of profitable deals in the summer and fall, while celebrating the completion of successful redevelopments.
Most recently, we announced the official transition of the multifamily property Emerald Greens in Gulf Shores Alabama, to ONE CLUB Gulf Shores. We’ve conducted an extensive capital improvement program at ONE CLUB, enhancing the standards of living for area residents with broad renovations to all amenities. ONE CLUB offers easy access to Gulf Shores, a favorite spot among individuals and families looking for second homes or winter getaways without the crowds found at neighboring beach destinations.
In August we closed another profitable deal, a $20 million joint venture equity investment for the ground up construction of RiZe at Opus Park, in Minnetonka, Minnesota. We partnered with sponsors LeCesse Development Corp. and Morgan Management for the project, with a total capitalization of approximately $73 million. RiZe will be converted into a 322-unit, luxury class multifamily building.
July was also a successful month, with the grand opening of East 9 at Pickwick Plaza, a premier apartment and retail community in Kansas City, Missouri. We worked with Gold Crown Properties to structure and fund a $57 million capital solution for the project, which included a $30 million first mortgage loan, federal and state tax credits, and equity. This covered the redevelopment of four buildings covering an entire city block.
In June we celebrated an equally exciting ribbon cutting for 329 Pleasant Avenue, an eight-story, luxury apartment complex in East Harlem, New York. The 21,500-square-foot modern building contains 20 studio, one, and two-bedroom apartments. We collaborated closely with HAP Investment Developers to bring the project to fruition since originating the ground up construction loan in April of 2015.
Other recent accomplishments include, among many, our recent $62 million first mortgage loan for the refinancing of a 618,000-square-foot rentable office building located at 4000 Connecticut Avenue in Washington D.C. Currently consisting of a seven-story building spread over six open atria and 14 “pod” office structures, the asset was previously the headquarters for Intelsat, a video and broadband company. The asset is located in the prosperous Van Ness neighborhood of D.C., next door to Embassy Row. UC Funds worked with key principals Mark Karasick and Michael Silberberg to secure the deal. Loan uses will include a $47.5 million debt payoff, a $2.5 million carrying cost reserve, and a $6.2 million interest reserve.
Be sure to check back in February for more exciting updates!