LP Equity & GP Co-Invest
Filling Developers' Needs for LP Equity and GP Co-Investments
LP Equity
Taking You To The Next Level
As developers grow and pursue more projects, they often find themselves unable to fulfill equity requirements. Despite "friends and family" money, nearly all developers reach a point when they need to move up to the next level and bring in joint venture or LP capital from a third party investor. Vista Capital specializes in introducing LP investors with whom developers can form long-term, programmatic relationships.
GP Co-Investments
Equity Within The GP
When developers become successful enough to attract institutional LPs, the joint ventures can become so large that they pose problems to the developer for the equity required within the GP. Vista Capital works with a variety of investment firms that specialize in these situations and will fund up to 90% of the equity required within the GP. Structures vary on a deal by deal basis, but GP co-investors typically share in the developer's promote and often ask for a share of the fees.
Land Lots & Home Building
Capital for Residential Land Developers and Merchant Home Builders
Is housing at the end of the cycle?
In talking to real estate investors and lenders all over the country, there are many who believe we are “late in the cycle,” and that housing in particular, is over-heated. And there are several reasons to be cautious, including interest rates, rising construction costs and millenials - who aren't buying homes because it's not their "American dream" or they're burdened by student debt.
In light of these views, one has to wonder, is housing really at the end of the cycle?
While there's no doubt certain markets are frothy, it's myopic to paint the whole country with one broad brush. More importantly, there's an opportunity being missed because in times like these disciplined investing can lead to success.
Taking the long view
As a country, we are "massively underbuilt" - especially with respect to affordable and workforce units, where shortages are severe. By conservative estimates, we're under-built by at least 3 million units and we add 500,000 units to the deficit every year.
A great deal of this deficit is because capital has never fully come back to fund developers who buy land and create finished lots for merchant home builders. In addition, smaller local builders can't get the construction financing they need because banks are so constricted.
It will take time to return to normal levels of supply and demand, so Vista Capital will continue to offer solutions by helping land developers and home builders find the capital they need.
Capital for Land Developers
Vista Capital specializes in securing joint venture equity (including GP/Sponsor co-invest capital) and financing for developers who buy land, guide it through the entitlement process, create an approved subdivision map and sell paper lots; or put in all of the infrastructure to create finished lots for home builders.
The capital sources for this strategy have typically been in the land investing business for decades and remain committed to the long term production of residential lots despite what the "herd" is doing.
Capital for Home Builders
In markets across the country, the downturn wiped out a lot of local builders, and those who survived, still struggle to get construction loans. I've developed a variety of funding sources that will lend to home builders at competitive rates and with higher advances than most banks; often with non-recourse debt.
And for home builders who need equity to grow their borrowing capacity, I have capital sources who know and like the vertical side of the business and will co-invest at the equity level with merchant home builders.
Lending to Lenders
Credit Facilities For Private Money Real Estate Lenders
Through a select group of national and regional banks, along with a handful of local banks and investment funds, Vista Capital is uniquely qualified to arrange credit facilities for private real estate lenders.
Most lenders use these facilities to lever the discretionary funds they manage; allowing them to stretch their capital and to grow their loan portfolios.
- Debt facilities start as low as $10 million
- Typically non-recourse
- Secured by an interest in the first trust deeds or mortgages - NOT the underlying real estate
- Acceptable properties include SFR (NOO), multi-family, office, retail, industrial, some hospitality and some land
- Advance rates, interest rates and other terms vary by institution.
$50 million credit facility
Vista Capital arranged a $50 million warehouse facility on behalf of a CRE lender with more than $4 billion AUM. The facility was provided by a national bank and was indexed to prime. The facility will help the lender deliver higher returns to it's investors as a result of bringing moderate leverage to the loan portfolio. It is expected that the facility will grow to $150 million.
Warehouse Line of Credit for CRE Bridge Lender
Vista Capital Arranged a $50 million warehouse credit facility for CV Capital Funding, a New York City-based commercial real estate lender specializing in bridge loans for transitional properties. The facility was provided by a national bank and is indexed to 1ML.
$35 Million Term Facility
Vista Capital arranged a $35 million term debt facility for Renovo Financial, a Chicago-based private money lender that specializes in business purpose loans for the rehab and construction of single family and multifamily properties. The facility was provided by a special purpose fund comprised of investments from European family offices and institutional investors.
$15 million across 2 Lines
Vista Capital arranged two separate credit facilities for Direct Private Lender, a private money lender with offices in Bethlehem, Pennsylvania and St. Augustine, FL. The first was a $5 million line of credit provided by an entity owned by Oaktree Capital Management. The other was a $10 million warehouse credit facility provided by a $22 billion national bank and tied to the 1ML index.
Multifamily Capital Solutions
Equity and Debt for Ground-up and Value-Add Strategies
Not For Everyone
If you own a stabilized apartment property and need to refinance your agency loan, or are purchasing an asset that fits in your "core" strategy, we're probably not for you.
But if you're looking to acquire a property that needs to be re-positioned ("value-add strategy") or you're embarking on a ground-up construction project, we can help with construction and transitional debt, along with long-term equity solutions; particularly if you need capital partners for more than one deal.
Experience Across The Sector
Vista Capital has experience with various segments in the multifamily asset class including:
- Senior Living (CCRC, Independent, For-rent, For-sale, Assisted, Memory Care, Skilled Nursing)
- Student Housing
- Market Rate Apartments
- Workforce Housing
- TOD's
Bridge Loans
Debt For Properties in Transition
Vista Capital has a vast network of bridge lenders around the country with solutions for your particular opportunity. Property types funded include:
- Multifamily
- Single family (NOO) - fix/flip
- Small builder subdivisions
- Hotels
- Office
- Industrial
- Self storage
- Retail
- Data Centers
- Land
Common Loan Situations
- Acquisitions
- Refinancing
- Pre-Development
- Value-Add
- Limited or non-cash flowing
- Time Sensitive Closings
- Bank Turndowns
- Discounted Note Payoffs
- Opportunistic
- Property Improvements
- Homebuilders
- Foreclosures
- Debtor-in-Possession
- Bankruptcy Exit
- Note Purchases
Financings Arranged
GP Co-investment
Vista Capital (in partnership with The Morrison Company) arranged a $10 million co-investment within the GP of a $600 million joint venture to develop 6 million SF of Class A distribution warehouse space in the Inland Empire of southern California. The co-investment was provided by a Texas-based asset manager and the LP is a $200 billion AUM soveriegn pension fund manager.
LP Equity to Entitle Land for Distribution Warehouse
Vista Capital (in partnership with The Morrison Company) arranged an LP equity investment of $9.2 million to entitle 100 acres of land in the Inland Empire of southern California for the development of 1.5 million SF of distribution warehouse space. The LP is a $1 billion AUM Canadian investment manager.
Land Recapitalization
Secured $14.5 million of participating debt to re-capitalize a portfolio of 1,639 single family lots on 466 acres in the Inland Empire of Riverside County, CA. The portfolio was a legacy asset of a joint-venture between The Lansing Companies and a Boston-based investment fund, but Lansing needed to find new capital due to the fund's end of term provisions. Vista Capital was able to arrange for a new capital partner to come in and provide enough proceeds to purchase the old partner's interests and to fund the development and carry costs of the portfolio.
JV Equity for Land Developer and Home Builder
Secured $94 million of capital ($24 million of joint venture equity, - $70 million of participating debt) on behalf of a regional land developer and home builder from a New York hedge fund to recapitalize twenty residential subdivision developments and to infuse the operating entities with working capital. The capital allowed the developer to buy out fourteen JV equity partners and consolidate the outside capital with one counter-party.
Defaulted Note Purchase Financing
Secured $20.2 million from a state pension manager in the depths of the most severe credit crisis. Funds were used to acquire two defaulted mortgages at less than 50% of the unpaid principal balance of $42 million. The underlying properties were newly developed senior living communities that were soon fully leased and highly profitable.
Acquisition and Bridge Loan
Secured a $2.4 million acquisition/bridge loan for Weintraub Real Estate, a Malibu-based developer and operator of commercial properties in southern California. The loan was provided by a federal credit union and the proceeds were used to buy adjacent properties in downtown Palm Springs. The developer intends to create a boutique hospitality and spa experience within walking distance to the heart of the city.
Coastal California Ag Loan
In association with The Morrison Company, a Newport Beach-based property brokerage, Vista Capital arranged a $14 million first trust deed for a 78 acre estate overlooking the Pacific Ocean in Cambria, CA. The property presented a challenge due to it's rural location, but Vista Capital was able to secure an agricultural loan since the property included a Pinot Noir vineyard. The owner received a 30 year mortgage below 4%.
CMBS Loan
Secured a $14.5 million CMBS loan for a boutique hotel in Skaneateles, NY. The main challenges were an extremely high loan to room ratio, the lack of a national brand, and an extremely volatile risk spread environment.
Boutique Hotel Refinance
Secured a $16 million loan and $4.5 million operating line of credit for King Ventures for the SeaVenture Resort Hotel in Pismo Beach, CA.
Portfolio Debt Purchase
Secured £105 million (~$160 million USD) from a U.S. multi-billion dollar asset manager to purchase a distressed CMBS debt portfolio secured by 45 commercial properties in the U.K. owned and managed a Dublin-based real estate firm.
Acquisition and Development Loan for Land Development
Secured $35 million of A&D financing for King Ventures for the purchase of a boutique hotel, plus 300 acres of land; including entitlements (tentative tract map) for more than 1,800 residential units.
Multifamily Bridge Loans
Secured two bridge loans for DLP Capital Advisors, a multi-disciplined real estate firm with more than $400 million AUM. The first loan for $5.3 million was used to acquire The Dolphins and an apartment community in Titusville, FL and the second loan of $3.6 million was used to acquire Merritt Landing in Brunswick, GA. Both properties fit DLP's value-add strategy with a long-term hold. The loans were secured through two separate private lenders with specialties in multi-family bridge lending.
Jacksonville Subdivision Development Loans
Vista Capital arranged a series of land development loans for three single family subdivision in Jacksonville, FL for Corner Lot Development Group, one of the premier land developers and home builders in northeast Florida. The loans were higher than typical leverage and allowed the developer to complete all three projects without raising equity from outside investors.
Newport Beach Purchase Mortgage
Vista Capital arranged a $15 million purchase mortgage on an exclusive Newport Beach estate. The client owns a portfolio of apartment properties and wanted an interest-only loan to preserve cash flow. Vista Capital was able to secure the mortgage from one of the few portfolio lenders in the country providing loans for these ultra-luxury residences.
About
John Condon, Managing Director
Vista Capital was founded in 2004 by John Condon who brings more than 30 years of finance and entrepreneurial experience to his clients. Through Vista Capital, he has arranged more than $1 billion of debt and equity financing for a variety of ventures and holds multiple licenses through the NMLS (#1439503 and ) and The California Department of Financial Protection and Innovation (#60DBO44198).
He is a graduate of Marquette University and began his career as a CPA in audit and taxation with Grant Thornton. He is a passionate advocate for The First Tee of The Coachella Valley, a member of various commercial real estate and finance organizations and resides in Palm Desert, CA with his wife and children.
