GenX Capital Partners to Offer 95% Financing at 5.9% Blended Rate for Commercial Real Estate Projects
As a boutique real estate investment bank, GenX Capital Partners (GenXCP.com) closes over $ 75 million to $ 100 million per year or more in placement and debt / equity investing using the traditional platform from 70/30 to 80/20 (sometimes 85/15 with a “senior stretch”) in typical debt / equity structures for all asset classes.
However, once COVID hit, those ratios reversed due to debt funds, private equity firms and Family Office partners removing reigns from funding, making it nearly impossible for developers to close deals. business without paying more personal capital and monitoring their cash flow. -the cash flow and IRR ratios drop significantly. That is to say until now.
Step into GenX Capital Partner’s 99-year, game-changing hybrid finance platform for how they fund transactions in the future. They can now combine their lease financing component with traditional debt financing, increasing the developer’s leverage by up to 95%, while avoiding the need for expensive financial partners.
Think about this for a moment; the real estate asset itself generates a return on equity (ROE) of 15-20% or more per year whereas the land never generates more than 4-5% ROE, if you are lucky. Dirt is simply a placeholder for the building and nothing more. By separating the two, you can maximize your overall returns without getting blown away by the low risk, low return land component. As part of GenX Capital’s funding structure, you take what was a 4-5% ROE with the land, extract its cash value through a sale to their company, reinvest that proceeds in the asset generating higher income that earns 15% or more, pay the 4 at a 5% land rental rate while unlocking a 10% ROE differential that was hidden in the dirt. And all of this before you factor in the fact that you can amortize those lease payments along with other deductible expenses, and in doing so, further increase the cash flow and IRR projections.
Imagine having the ability to acquire or develop a $ 20 million property with only 5% equity at a blended rate of less than 6%, all told? For lack of a better word, this is insane and is a complete game-changer for how developers do deals in the future.
As part of this hybrid land lease financing platform, GenX Capital Partners acquires the land at 30% of the expected stabilized value (taking the fourth year NOI). These funds are now part of the global capital stack. GenX will then lease the land to the developer at a rate of 4.25% to 5%, depending on the asset class. In addition, GenX Capital will bring in the lender, making it a “one stop shop”, financing both sides of the transaction. More importantly, this ground lease is fully compliant and accepted by HUD, Fannie Mae, Freddie Mac and all major lending institutions, allowing for future refinancing or even a sale of the asset down the road.
In the example above, the developer eliminated the need to raise an additional $ 5.1 million in expensive LP / Pref / Mezz financing and hedged that difference at a 4.25% interest rate while increasing IRRs, thus accelerating their development schedule because they are not bogged down in the mobilization of capital. , while securing the loan for the bank from a DSCR (Debt Service Coverage Ratio), as it generally goes from 25 BP to 50 BP compared to a traditional structure. After adding their reasonably priced acquisition / construction debt, developers typically see a blended 5.5-5.9% “all-in” rate, eliminating the need for expensive equity capital and partners in general.
This can be done for ALL asset classes, for basic and ‘value added’ acquisition projects with typical check amounts as low as $ 2 million and up to $ 200 million in some cases. . It is an excellent financing mechanism for development and acquisition transactions of retail, office, hotel, multi-family and industrial businesses. Imagine now having the ammunition to close larger deals with more capital at your disposal and without the need for additional partners or equity? High seven- and eight-digit deals are now possible, with the ability to pass quickly and efficiently knowing the dollars will be there to be done. Expanding your real estate portfolio has now become easier, and the approval and funding process incredibly less stringent and faster than local banks. This is a game changer for sure.
“We are actively seeking opportunities in southern Maine and along the east coast to Florida and into the mid-US markets and Texas,” said Mark McClure, Managing Partner of GenX Capital Partners. “But given that we are currently doing tens of millions of dollars of development in Southern Maine as a business, our focus here for now is from lending and investing to personal development.”
One of the many ongoing projects that McClure and his partners Paula Wallem, Ronnie Goddard, Jeff Pollack and Moshe Miller are putting together is the development of The Mark in Cumberland Foreside, a 50-unit high-end condo project that will come with Top notch amenities, prime location and units with rooftop terraces. McClure said he hopes to launch presales the first of the year with more than 20% of units already advertised from buyers as far away as Miami.
“The New England real estate market continues to remain dynamic and, based on our extensive research and market research, we believe this geographic segment and southern Maine in particular will be so over the next several years.” , McClure said. “Obviously our investment partners are thinking that way as well, as we look to deploy more loan capital here in New England as part of this hybrid land lease finance platform while also expanding real estate on our own behalf. “
Do you have a development project or an asset that you are looking to acquire but your down payment or your equity reserves are minimal? GenX Capital Partners’ hybrid land lease finance platform might have your solution. By combining the proceeds of their land lease with their acquisition or construction loan, reaching 90-95% of the capital stack is quite feasible, allowing you to keep more of the business in your business. pocket rather than in the hands of financial partners.
Contact Mark McClure at 305-507-6777 or [email protected] or to learn more about financing your project using GenX Capital Partners’ hybrid land lease platform or to ask them to model what that would look like based on your current structure.
Featured property: Professional mixed-use building for sale in Arundel