Gryphon Real Estate Capital Partners and CarVal Investors Form Transitional Multifamily Bridge Loan Venture
July 20th, 2021
NEW YORK and MINNEAPOLIS, July 20, 2021 /PRNewswire/ -- Gryphon Real Estate Capital Partners and CarVal Investors announced today the formation of a joint venture to originate multifamily senior bridge loans in primary and secondary markets throughout the United States.
The Gryphon-CarVal Multifamily Loan Program (the "Program") is designed to advance up to 85% of the capital stack in a single execution facilitated by the Program's ability to close on balance sheet. Targeted loans range from $20 million to $75 million with competitive market pricing. Loan servicing and asset management will be retained by the joint venture.
Leading up to the announcement of the joint venture, over $150 million of multifamily loans have closed or are under a signed term sheet. The Program is primed to deploy $1.0 billion or more over the next two years.
Gryphon and CarVal will target sponsors focused on either value-add or lease-up strategies. Value-add opportunities are cash-flowing properties that require time and capital to re-position, perform renovations, improve property operations and increase rents. Lease-up strategies are newly constructed properties that require time to stabilize and season cash flows, prior to securing agency financing or selling the property.
"We believe this is a compelling time to enter the multifamily bridge loan market," said Seth Cohen, a Principal for CarVal Investors responsible for managing loan portfolio investments globally. "Our partnership with Gryphon is rooted in our shared thesis that there is a long-term need for middle income housing, particularly in growing U.S. markets."
Paul Mullaney, Managing Director for CarVal Investors' North American Real Estate business, added, "Gryphon has built an institutional, data-driven platform with extensive multifamily lending expertise, which melds well with CarVal's investment strategy."
"We are excited to join forces with CarVal as we launch this well-capitalized and synergistic venture," said Angelo LoBosco, Managing Partner at Gryphon. "We look forward to building out the Gryphon-CarVal platform by successfully executing on our investment strategy."
Jim Hopkins, a Principal at Gryphon added, "We believe that the combination of Gryphon and CarVal will be a powerful force in the multifamily bridge loan market."
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New York-based Gryphon Real Estate Capital Partners committed $250m to middle-market loans last year and has enough capital from investors to fund as much as $1bn in loans this year.
“We develop a strategy that fits what the investor needs in terms of risk profile, cash flow and other factors,” said Angelo LoBosco, chief executive of Gryphon, which creates customised debt strategies with middle-market transitional opportunities.
Yields on lower-risk “light” transitional strategies start at Libor plus 350bps from cash-flowing assets, while ground-up construction loans generate higher returns, he said. “Since our roots are in real estate rather than finance, we structure loans that work for the underlying real estate and business plan.”
LoBosco said, at the current point in the market cycle, it is important for debt investors to be prepared to weather adversity. “While it is not our goal, our workout and operating experience allows us to take a property back and manage the value creation if we need to,” he said.