Outlook for Q3 and Q4: Persistent Political and Economic Uncertainty Across Globe Will Fuel Investor Interest in U.S. CRE Market
Political and economic uncertainty across the globe, including the fallout from Brexit, will fuel investor interest in the U.S. commercial real estate market throughout the second half of 2016, according to the principals of Case Real Estate Capital, LLC (Case), a commercial real estate investment firm based in northern New Jersey. Since its inception in 2013, Case has scaled up to a $100 million lending platform focused on mid-market transactions for transitional assets.
“Global investors will direct more capital to the U.S. real estate market, which is already seen as a safe haven for investment,” said Sandy Herrick, founder and managing principal of Case. “With the continuing dislocation of conventional credit providers, an expanding opportunity is presented to non-regulated lenders like Case.”
Early in 2016, Case entered into a joint venture agreement with a New York-based real estate credit fund and continues to ramp up its investment activities. The firm is active as a high-yield private lender; a purchaser of performing, sub- and non-performing debt; and an opportunistic equity investor.
Most recently, Case through Case Investors III, LLC provided a $15.15 million first mortgage bridge loan to SAMTD Acquisitions Woodbridge LLC, a New Jersey-based residential developer, to facilitate the acquisition of 7.1 acres of fully entitled land in Woodbridge, N.J. The property is approved for construction of 355 residential units. “We expect to be taken out by a construction lender within a year,” Herrick added about the transaction.
Case’s funds are typically deployed as note purchases in addition to bridge and acquisition loans or rescue and restructure capital. The firm concentrates on deals in the $1.5 million to $30 million range for properties in transition located in the New York metropolitan area and in South Florida. It originates and underwrites each transaction and is responsible for servicing.
“We source transactions from a variety of market participants and intermediaries, and are more aggressive in securing deals this year given our new JV vehicle,” said Chris Mavros, who serves as the company’s managing director, principal and chief financial officer.
Case’s Experienced Team Possesses Unique Synergy
In an industry where change is both a given and a necessity, Case has a unique synergy in that Herrick and Mavros have worked together for more than two decades, including years at Hudson Realty Capital, LLC and SWH Corp., which Herrick founded. Herrick also was one of the co-founders of Hudson Realty Capital and has orchestrated investments in more than $5 billion worth of commercial real estate during the course of his 30+-year career.
At Case, Mavros draws on his 20+ years of experience spanning all aspects of financial management and control. In addition, he oversees the management of banking and insurance relationships and has oversight responsibilities on asset management.
Case’s cohesive team also includes Jon Leifer as director-acquisitions, who possess extensive industry experience, including his work with acquisitions, development, and asset and portfolio management in both the commercial and residential sectors. Leifer’s broad responsibilities at Case include sourcing and closing performing, sub- and non-performing debt acquisition opportunities as well as originating loans. Kathie Ventura, administrator, brings more than 25 years of administrative and client service expertise to the team.
Investment Activity Spans Sectors
Case’s team has deep industry knowledge and the company’s investment activity has spanned numerous sectors since its inception. Earlier this year, Case finalized a $3.5 million transaction, purchasing three senior notes – two performing and one non-performing – secured by residential investment properties located in Manhattan and Hunterdon County, New Jersey.
In 2015, Case was particularly active in the warehouse/industrial and retail sectors. The firm finalized a $20.5 million transaction, purchasing two non-performing senior notes secured by a group of nine net-leased properties and simultaneously assuming ownership through a deed-in-lieu (DIL) of foreclosure agreement. The transaction included high-credit, triple-net leased CVS properties and a 127,000-square-foot FedEx warehouse/industrial asset in Bergen County, New Jersey. In early 2016, M&T Bank provided $13 million in financing for the retail assets. The Case sponsored venture originally purchased the properties without financing.
Case helps local entrepreneurs take advantage of near-term profit opportunities. The principals of Case evaluate each loan, property and real estate debt purchase based on its own merits, the borrower’s or seller’s situation and business plan, and whether local market conditions allow the firm to execute proven value creation strategies.