At the same time, the company is raising capital for its investment fund. Currently there is roughly $20 million on hand; Siman expects that number to reach $50 million within a few months, based on the interest he is receiving right now. Those are unlevered dollars, he says; the company has not decided whether to seek leverage.
The growth in funds is due to an uptick in interest in BlueWater's approach, Siman says: the company underwrites to a lower LTV to provide bridge loans to commercial real estate clients. Borrowers, once they have met the underwriting criteria, have the advantage of a bridge line that is more flexible than many in the market at the moment.
The loans are typically used by companies that either want a quick cash out for an opportunistic investment or need to stabilize a property. Their lending is usually equally divvied up between these two constituencies, Siman says. More recently, though, there has been an increase in the number of clients that want a bridge loan in order to take advantage of an opportunity in the real estate markets.
Loans amounts range from $500,000 to $5 million, with the sweet spot between $1 million to $3 million. Term is usually for one year. BlueWater operates, for the most part, in the greater DC area, but does also lend to projects in other parts of the Mid-Atlantic. For instance, it recently originated a $4.5 million, 24-month term bridge loan to a co-operative community in Hampton, VA. The borrower used the capital needed to pay off the current maturing loan on the property and take care of some maintenance. Once the renovations are complete, it plans to refinance through a more traditional source of financing.
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