New Bridge Loan Lending Facilities Connect Projects with Funding

There’s been a miniature boom in new bridge street lending facilities. On Monday, NewPoint Real Estate Capital announced its multifamily bridge lending program. The target is tailored bridge loans for “short-term interim financing for acquisition, refinance, or recapitalization of multifamily investments.”

The loans will run from $5 million to $50 million, terms up to five years on “light to moderate transitional multifamily properties” in the US. The company is also claiming such features as prepayment provisions, in-house servicing for future funding and draw requests, and “competitive pricing and waived exit fees when loans are refinanced through one of NewPoint’s permanent financing options.”

Then NewPoint followed up this announcement with the news that it has acquired some assets from Housing & Healthcare Finance (HHC Finance). Those include the FHA multifamily and healthcare origination business and loan servicing portfolio

Meanwhile, Liberty SBF announced “a new bridge loan product for middle-market CRE investors who previously had few financing options available to them.” Non-recourse loans will be for between $5 million and $15 million at two- to three-year terms on up to 80% of loan-to-cost at L+450 rates. There is also a broker incentive program that provides fees for referring clients.

Bridge financing has been important in some sectors. For example, since last year, developers of large multifamily projects have used bridge loans to keep a project afloat while developers seek to stabilize them and gain positive cash flow.

Value-add investors are another reason for a jump in bridge lending. “Rent growth has supported transitional business plans where sponsors are buying properties with the idea of investing additional capital into those properties or executing a rental increase plan,” Alex Cohen, CEO of Liberty SBF, told GlobeSt.com in October 2021. “We are seeing a lot of bridge demand from borrowers that are executing on those types of business plans.”

There’s also growing interest around the bridge loan market. Real estate investment and management firm Harbor Group International announced back in May its first collateralized loan obligation, or CLO, on a collection of bridge loans on multifamily assets across the US in an aggregate deal worth about $558 million.

In August, Reigo Investments, a global investment firm based in Israel, working with Cantor Fitzgerald, announced the closing of a $100 million residential bridge loan securitization. What made this project unusual was the use of artificial intelligence and data analysis to analyze past loan decisions to build predictive systems. The firm identifies hundreds of parameters and tries to correlate them with loans to determine which are likely not to default, which might default but are likely to allow recovery of money, and which would likely default and not return investor funds.