Today’s rapidly changing marketplace requires a disciplined risk-management process when it comes to commercial real estate investing. At Case Real Estate Capital, LLC (Case), a tempered approach and local market experience is continually illustrated through drama-free exit strategies. Most recently, Case executed a successful exit strategy, within 14 months, on a $12,000,000 first mortgage bridge loan transaction for a 25-acre parcel of land to be zoned and entitled for its projected uses – senior housing, retail, and public marina-focused development – in Bonita Springs, Florida.
At the time of closing, the site was approved for a fully-permitted 72-slip marina; 207,000 square feet of commercial space, specifically including a 10,000-square-foot waterside restaurant retail building with a boating gas component, a 25,000-square-foot upland retail building, and small (<2,500 square feet) clubhouse and storage outbuildings. It also included a 150-slot dry boat storage building and a 3-story parking garage.
For private lenders, even those with expertise of a local market and a grounded understanding of fundamentals and trends, engaging in due diligence is of the utmost importance in order to develop solutions quickly and efficiently. Lenders must also be satisfied with the borrower’s experience, track record and creditworthiness.
In the Bonita Springs deal, the borrower, an inexperienced real estate investor and owner of the property, needed to pay off his then-maturing first mortgage loan and take the property through the required significant rezoning and variance approvals before it could be marketed to developers. Case, which was first approached by the owner’s lawyer, a well-respected attorney with an exclusive clientele, provided first mortgage financing for an 18-month term with certain rights to extend.
“Our competitive terms exceeded the borrower’s expectations, and we beat his timeframe for closing on the funds,” said Chris Mavros, managing director, principal and CFO of Case. “This ‘predevelopment loan’ gave him the time necessary to bring the property to market. Fourteen months later, the land was successfully sold to a developer and the loan was paid off in full, months before the due date. The developer is now building the site as planned.”
Given Case’s local market expertise and comprehensive analysis of the area, the Bonita Springs market proved attractive, including its proximity to Fort Myers and Naples and access to road and airport transportation. Located in Lee County, Bonita Springs is part of the Cape Coral-Fort Myers metropolitan statistical area, which was ranked ninth on Forbes’ 2018 list of America’s fast-growing cities. According to Forbes, the projected population growth in 2018 for the MSA is 3.37 percent.
Some lenders might have backed away from the transaction given the property was not yet fully entitled or zoned and the borrower was relatively inexperienced in this segment of the market. “We were presented with a zoning plan to be passed by the city and an environmental guarantee, essentially a clean bill of health for the site in that the marina area was already fully-permitted by the Army Core of Engineers and the Florida Department of Environmental Protection; these two components enabled us to proceed in an expeditious manner,” said Aysha Cox, vice president who is based in the company’s south Florida office. “Even though it was the first transaction for the borrower in this segment of the market, we were satisfied with his creditworthiness and strong track record of previous successful projects in other sectors.”
A northern N.J.-based commercial real estate investment firm, Case concentrates on transactions in the $2.5 million to $40 million range for transitional properties in the New York metro area, south Florida as well as the Northeast and Mid-Atlantic regions. Case is active as a high-yield private lender; a financier of transitional properties; a purchaser of performing, sub- and non-performing debt; and a mezzanine and equity investor. Funds can be deployed as real estate debt purchases, bridge and acquisition loans or rescue and restructure capital. Case is one of the leading bridge lenders in New Jersey, New York and Florida.