Financier Highlight:
Model Home Sale-Leaseback
Beachrock has identified a fund focusing on Model Home Complex Sale-Leaseback financing on a programmatic basis. There are many reasons to consider a sale-leaseback arrangement. While traditionally, this financing mechanism has allowed publicly traded companies to reduce the level of standing inventory on their balance sheets, this structure has many benefits to the typical mid-sized private homebuilder as well. This financing can serve to repatriate equity more quickly (allowing the builder to have favorable treatment in equity waterfalls), free up capacity with their traditional bank lenders, and mitigate market risk exposure. Additionally, in many instances, transactions can be structured that allow the builder to retain some upside participation should home prices escalate!
The program that we have found has the following features:
Flexible term and extension options
Upside participation in some instances
Defacto non-recourse (lease will contain "make ready" provisions requiring the builder to de-convert and refresh the property at the end of the lease)
Builders that have their own sales and marketing team can sell the property on behalf of the new owner, recapturing the associated fees!
Quick quote / quick close (typically an appraisal paid for by the lender can be procured in 2-3 weeks)
Pricing on the lease in the "high single digits" + NNN
Financier Highlight:
C-PACE
Many multi-family and commercial developers and property owners are finding unique ways to make C-PACE financing work in their capital stack, and lower their overall cost of capital. Conceived in 2007, C-PACE is a financing vehicle whereby a C-PACE financier will provide financing that, at onset replaces mezzanine financing or pref equity in the capital stack with significantly lower cost of capital. The C-PACE financing is repaid as a voluntary tax lien on the property.
C-PACE is a surprisingly flexible financing mechanism, and can be used on almost any asset class (outside of residential), and for a wide array of eligible costs incurred (including costs previously incurred within a 36 month look back provision). We have a relationship with a C-PACE financier that has the following program guidelines:
Financing Amounts: $500,000 - $100,000,000
Repayment terms up to 30 years
Non-Recourse
Rate: Treasuries + 300 bps (typically in the high 5% to low 7% range), making this much less expensive than traditional mezz.
Prepayment: Typically available given early repayment fee.
When working with a C-PACE lender, it is important to work with a financier that has experience with both construction / bridge lenders, as well as perm lenders as the process can become very involved. Often times, a high level of education and guidance on the part of the C-PACE lender is needed during the transaction to help your senior lenders fully understand how the financing "works". Due to our relationship, we can pre-flight your proposed financing quickly, and let you know if C-PACE is a good fit for your needs.
Financier Highlight:
An Opportunity Zone Fund that "works"!
Fund yield target as low as 10% IRR
By now, you know that EVERYONE has identified a so-called "Opportunity Zone Fund". It has been one of the most anticipated developments in the financial world in recent memory.
That said, given the duration of the investments needed to take advantage of the Opportunity Zone program, not all funds are going to be successful, or necessarily good matches for your project. We have identified a fund that is specifically structured to accommodate the lower yields associated with the long hold periods. They are also structured with the ability to be flexible enough to make common sense decisions that allow the capital to work for you, the sponsorship.
What do we think makes this a unique program:
Focus on sponsorship track record
Lower co-invest (typically 10%, but as low as 5% for the "right" deal)
Both ground-up and major value add
All product types
Western US (other geography for the "right" deal)
Conservative leverage preferred
Lower 10% IRR targeted (to the fund) over a 10 year hold!!!