Industry Forecast: Greater Liquidity Continues; Success Requires Market Expertise.
In early 2016, the commercial real estate investment market will continue to experience greater liquidity, but deals may get more challenging to complete as a result of the unclear direction in this peaking cycle, according to the investment and origination principals of Case Real Estate Capital, LLC (Case). Based in northern New Jersey, Case is active as a high-yield private lender, a purchaser of sub- and non-performing debt, and an equity investor. Concentrating on deals in the $1.5 million to $30 million range, the firm will broaden its platform next year.
“Opportunities that take creativity and industry knowledge – and the ability to stomach uncertainty – are still out there,” said Sandy Herrick, founder and managing principal of Case. “The influx of money in the investment market may be driving prices too high for the intrinsic values of given properties, and a subsequent fall-out is certainly a possibility. Market expertise and the stability of the lenders’ balance sheets are the keys to offsetting that.”
Established in 2013, Case concentrates on transitional assets located in the New York metropolitan area, as well as throughout the Northeast and Mid-Atlantic regions and in South Florida, responding to the middle market’s need for smart, situational capital. Its funds are typically deployed as note purchases in addition to bridge and acquisition loans or rescue and restructure capital.
“Heading into the New Year, we expect the warehouse/industrial sector, particularly in the Northeast and the New York metro area, to remain strong,” added Herrick. “Solid opportunities in the retail sector will continue as well although on a case-by-case basis.”
This year, Case was 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 strategically-located retail and warehouse/industrial assets in New Jersey, New York, Connecticut, and Massachusetts.
The collateral for the notes consisted of a 127,000-square-foot warehouse/industrial facility in Bergen County, N.J. and eight, high credit triple-net leased retail properties totaling approximately 85,000 square feet in Long Island and upstate New York as well as in Conn. and Mass. “This deal required local expertise and creativity, and we immediately put our business plan to work by simultaneously purchasing the notes and DIL,” said Herrick.
Another notable transaction for Case earlier this year was the purchase of a non-performing senior note, with claims totaling $14 million, secured by a 31,000-square-foot urban retail property in the Coconut Grove neighborhood of Miami, Fla. The Coconut Grove area is undergoing substantial revitalization fueled by the Coconut Grove Business Improvement District and numerous new residential and multi-family developments underway.
Case helps local entrepreneurs take advantage of near-term profit opportunities. Its principals have a 30-year track record of handling complex transactions, and the company’s investor base is extremely diverse, including individuals, family offices and institutional investors.