In an increasingly complex world, perhaps now more than ever, developers are in need of solutions. That’s why niche funding solutions are becoming increasingly prevalent in today’s market.
Lenders are stepping in to help move projects forward with innovative loan structures that blend various kinds of financing to fit the needs and and risk tolerance of builders and developers.
Gary Williams, a partner with LaSalle Rothschild Capital Solutions who oversees their Midwest and Southeast operations, tells Agent Publishing that there’s no shortage of people borrowing money these days. The real challenge, he said, is matching up the right client with the right project.
For the remainder of the year and moving forward as the economy rebounds, lenders are going to see a flood of opportunities, according to Williams. Picking the right ones is key, he added.
“If developers and builders are in the market shopping for money, the best way to approach a bank or private equity firm or any Wall Street firm is to present a well-balanced risk-mitigated scenario,” he said. “What we see most of is a lot of projects out here, but many of them are unbalanced opportunities. Lose-lose situations never work for anybody.”
That’s how Rothschild Capital Solutions came to develop niche financing opportunities like its blend of mezzanine with preferred stock to create its real estate preferred equity product, for investors seeking the safety of preferred investor status.
Preferred equity provides bridge funding for developers and builders to get their project completed with about 10% or less of their own money, according to Williams.
“They get a debt loan or construction loan from the bank; this funding stops at a certain point, and there’s a gap,” Williams said. “That’s where we come in.”
Rothschild Capital Group of Illinois is based in Oak Brook and downtown Chicago.