Friday, April 10, 2015

Mission Capital Arranges $50Mln of Financing for Bridge Lender

Mission Capital Advisors has ar- ranged a $50 million financing facili- ty, from a foreign bank, for Columbia Pacific Advisors, allowing the Seattle investment manager to leverage its bridge-lending platform.
The financing was a first for Mission, a New York company that is best known for its activity in the secondary loan-sales market. But it’s hoping to carve out a niche, helping other lenders line up innovative fi-
nancing instruments to leverage their businesses.
The company got into the
loan-placement business in 2011 as
a complement to its core operation.
So it has focused, like most other
loan-placement brokers, in arrang-
ing loans and equity investments for
client properties.
It did just that with Columbia
Pacific, helping arrange an invest-
ment for the company, with which
it developed its relationship. So
when Columbia Pacific sought to
line up some sort of financing for its
bridge-lending platform, it turned to
Mission.
Columbia Pacific, which has some
$850 million of assets under man-
agement, invests on behalf of the
Baty family as well as a number of
family offices, institutions and high
net-worth individuals.
The Baty family’s patriarch, Daniel
R. Baty, previously was chairman of
Holiday Retirement Corp., which
was sold in 2007 to Fortress Invest- ment Group for some $6 billion.
In the real estate sector, Columbia Pacific operates a bridge-lending platform as well as a value-add equi- ty platform. It also operates a hedge fund and opportunistic-investment vehicle. Its bridge-lending platform, invested through Columbia Pacific Income Fund I LLP, has some $150 million of relatively short-term loans, many of which are secured by seniors housing. It raised a total of $153.1 million from investors as of the end
of March, according to a regulatory filing.
The fund holds loans on typical property types, such as office and retail properties, as well as non-con- ventional collateral, such as marinas and recreational-vehicle parks. That alone made lining up a credit facility challenging. It was compounded by the fact that Columbia Pacific’s loan portfolio is not homogeneous. Some of its lending involves so-called
“hard-money loans” – short-term debt with high coupons that often are originated to allow an investor to complete an acquisition in a very short time frame.
Mission evaluated a number of options for Columbia Pacific, from conventional warehouse lines, re- purchase agreements and corporate debt facilities. It ended up with a non-recourse financing facility with no warm-body carveouts, with an
unusual four-year term from a for- eign lender. Most financing facilities typically have three-year terms with potential extension options.
The financing facility gives Colum- bia Pacific the ability to continue to fund loans, effectively leveraging the equity capital it has raised. The facil- ity is secured by existing loans held by the fund and any new loans that are written, as long as they fit certain parameters.
“We were able to structure a fi- nancing facility with characteristics similar to a revolver,” explained Alex Draganiuk, a director at Mission’s debt and equity finance group. He said that the growing number of opportunistic investors that might have purchased loans through Mis- sion and now have shifted their focus to the short-term lending business could very well benefit from financ- ing facilities similar to the one that was lined up for Columbia Pacific.
A number of big lenders that in- clude Wells Fargo Bank and Citi- group provide warehouse facilities to many lenders, particularly those that rely on the CMBS market to recy- cle their capital. But few are willing to provide relatively small, flexible facilities, particularly to lenders spe- cializing in what could be considered non-conventional assets. That’s what Mission is hoping to take advantage of. “We can add value,” Draganiuk said.

Reprinted with permission from Commercial Real Estate Direct

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