Originate Report - December 2022

Grit – The drive to push through any challenges until success is achieved.

The last few years have been…challenging, to say the least, especially in this industry. Some of our clients and friends have exited the space in the face of overwhelming adversity while others have adapted, survived, and thrived against all odds. Those with the grit and fortitude to recognize

potential opportunity in the chaos of the last few years are continuing

their pipeline regardless of what is happening in the marketplace.

Speaking of grit, our final issue for 2022 features Briana Hildt, the Founder and CEO of Cardinal Capital Group. From a young age, Hildt’s parents instilled within her a strong work ethic resting on the foundation of resilience and self-confidence that have helped pay dividends over her career. As a female leader in this male-dominated space, she’s drawn on her grit and determination to create a successful business. Her decision to name her business Cardinal Capital is symbolic of the devotion a cardinal represents and indicative of her belief in the intrinsic power of devotion. Devotion to spending endless hours and late nights to close deals in a matter of days or out-competing multinational banks with hundreds of employees. With over $650 million in loans funded since 2020 representing a 200% growth rate, Hildt and the rest of the CCG team made it their goal to establish a company premised on transparency, communication, and reliability. Check out our cover story to learn more about Briana Hildt and Cardinal Capital’s rise in the face of adversity.

There is no better time than now to start planning for next year. #Innovate2023 will be here before you know it. With sponsorships selling fast, reach out to our team to learn more. Visit www.geracicon. com for details.

Want to be our next cover story? We’d love for you to #shareyourstory with us. Contact us to find out how: submissions@originate.report

Until next year, Lesley

The Woman in the Arena

BRIANA HILDT, FOUNDER AND CEO OF CARDINAL CAPITAL GROUP

By Mark Dewyea, Contributing Writer for Originate Report

Briana Hildt, Founder and CEO at Cardinal Capital Group (CCG), is in the business of creation. She pushes the boundaries of innovation and redefines the status quo, so it is only fitting that her favorite quote is a repurposed iteration of Theodore Roosevelt’s iconic “Man in the Arena” speech that is framed proudly in her office. In her case, just as with many powerful women who have and will continue to revolutionize all professions, “…the credit belongs to the woman who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends herself

Briana Hildt

Founder & CEO, Cardinal Capital Group

in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if she fails, at least fails while daring greatly, so that her place shall never be with those cold and timid souls who neither know victory nor defeat.”

It is no secret going above and beyond is often the single most influential differentiating factor when it comes to succeeding or falling just short— in both life and business.

lie. All metrics indicate that CCG has decisively accomplished their mission and are showing no signs of slowing down anytime soon.

Hildt is certainly no stranger to this type of hard work. With over $650 million in loans funded since 2020, representing a 200% growth rate, Hildt and the rest of the CCG team made it their goal to establish a company premised on transparency, communication, and reliability. When it comes to the financial industry, numbers do not

Originate Report recently had the privilege of sitting down with Hildt to discuss her journey to the top in the real estate lending industry, chat about the impressive success of Cardinal Capital Group, and what she foresees will be the most pressing issues in the immediate future for the industry.

Breaking the Mold

Every career arc is different, influenced by internal and external factors that dictate an individual’s professional journey. Although this certainly is not a groundbreaking observation, it is worth noting when someone defies the status quo

and defies conventional trends to accomplish something truly special, particularly in industries with longheld norms and customs, such as the historically male-dominated financial lending sector.

Hildt’s work ethic instilled in her from a young age. Growing up in rural Massachusetts to an entrepre neurial-minded father that helped shape her business savviness and a strong-minded mother who taught her to never take no for an answer, she learned early on the fundamental values of resilience and self-confidence which would prove to be essential as she mastered the art of real estate lend ing and successfully running her own thriving company. After graduating from the University of New Haven,

Cardinal Capital Group: Continues on

From Left to Right: Dominic Blad, Chief Operating Officer; Briana Hildt; Jake Malkoon, Chief Financial Officer

Hildt relocated to California in 2010 to fulfill her dreams of breaking into the real estate industry. Once she achieved early success working with distressed properties in the foreclo sure space, she developed an interest the private money lending industry as a means of providing vital work ing capital to critically underserved real estate investors and developers.

Leveraging her experience and vast network garnered during her time in the distress marketplace, Hildt decided to move back to the East Coast and launch Cardinal Capital Group. With a knack for crafting innovative funding solutions for even the most challenging real estate projects, she has consistently built a proven track record of delivering outstanding results for her clients.

At no point in her career has Hildt let the fact that she is a woman inhibit her from actively pursuing her professional goals—in fact, she has used it to her advantage. Hildt has always had a knack for developing close working relationships with her clients built upon a mutual investment in one another’s longterm success. Her decision to name her business Cardinal Capital is symbolic of the devotion a cardinal represents and indicative of her belief in the intrinsic power of devotion. Whether it is dedicating endless hours and late nights to close deals in a matter of days or outcompeting multinational banks with hundreds of employees, devotion is

what sets CCG apart from a standard lender, and the company has acquired a reputation for delivering reliable results day in and day out. “I used to go to lending conferences that would have 500 male attendees and only five fellow women,” recalls Hildt. “I never let that gender imbalance stop me or intimidate me. I wanted to change the trajectory of the lending industry and see what a woman could do in a ‘man’s world.’”

Building a Culture of ClientCentered Lending

The lending industry has grown into an extremely competitive industry. It takes something different to stand out from the pack, and CCG has done just that.

With nearly three decades of collective industry experience, the CCG team prides itself in delivering individually tailored loan products

WITH OVER $650 MILLION IN LOANS FUNDED SINCE 2020, REPRESENTING A 200% GROWTH RATE, HILDT AND THE REST OF THE CCG TEAM MADE IT THEIR GOAL TO ESTABLISH A COMPANY PREMISED ON TRANSPARENCY, COMMUNICATION, AND RELIABILITY.

Cardinal Capital Group: Continued from pg.

From Left to Right: Jake Malkoon; Briana Hildt; Dominic Blad

geared to meet the needs of a nationwide client-base. CCG offers a broad range of loan products and rates, starting with rates as low as 7.99%. Similarly, CCG has the requisite insight and liquidity to handle optimal volume from toptier developers while educating and assisting newer investors to achieve their goals. No venture is too complex or ambitious for the experts at CCG, whose approach is to be a financial partner to their clients, not just your average private money lender.

CCG’s lending results speak volumes for the effectiveness of their clientcentered corporate culture. They have had exactly zero foreclosures on the loans they have serviced, an accomplishment that is especially

impressive given the pandemicrelated challenges lenders have had to contend with for the past two years.

Flexibility Pays Dividends in a Dynamic Marketplace

It is somewhat of an understatement to say that the past few years have been atypical—not just within the real estate space but in all facets of life. COVID-19 and the subsequent economic fallout have resulted in a marketplace characterized by widespread uncertainty and recordsetting volatility. Lenders, like every other business, have been forced to adapt to these fluctuations to remain viable and respond to the constantly evolving needs of their client bases. While that is undoubtedly easier said than done, CCG has managed

to not only sustain its lending operations but to grow and scale its business exponentially.

What is the secret behind their suc cess? In a word: Flexibility. With labor shortages and supply chain issues plaguing the construction in dustry, Hildt quickly realized that her clients needed viable capital solutions to help them mitigate risk and financially navigate unpredict able project timelines impacted by delays and setbacks. Accordingly, CCG emphasized working with its client to develop bridge financing and flexible repayment schedules to keep projects on track.

CCG’s enviable degree of responsive ness in emergencies is what keeps clients coming back to them for all their lending needs. With a compre hensive lineup of competitive loan programs specifically geared to meet the unique requirements of investors looking to quickly close a fix-andflip, buy-and-hold, refinance, new construction, or commercial trans action, CCG completes these pro grams in a fraction of the time and without the administrative hassle of a traditional bank.

For more information, please visit: https://ccgloans.com/

Another Paw-Fect Day at the Office Briana Hildt

CHURCHILL REAL ESTATE

Leveraging Technology to Revolutionize the

Real Estate Investment Space

By Mark Dewyea, Contributing Writer for Originate Report

Masters

The real estate investment industry is an inherently dynamic landscape in which companies must constantly adapt to frequently fluctuating market trends and shifting client demands to survive. In an increasingly crowded sector, gaining a competitive edge over the competition to attract more business is a top priority for many lenders. However, this is easier said than done.

One company that stands out from the pack is Churchill Real Estate, a tech-enabled investment management company focusing on investments in the transitional real estate debt market. Originate Report had the privilege of catching up with Travis Masters, Managing Partner at Churchill, to get an indepth look at how the organization integrates cutting-edge technologies to simplify processes and provide

Travis

From Left to Right: Mike Pizzitola; Justin Ehrlich; Sarper Beyazyurek; Annamarie Radford; Derrick Land; Sorabh Maheshwari; Travis Masters

next-level customer service to its rapidly growing client base.

Diversified Capital = Reliable Lending

Efficient and predictable access to adequate financial resources is essential for sustainable lending—a component of the business that Churchill prioritizes to ensure they can continue to grow and scale their operations. “Churchill’s differentiator is our diverse capital and investor base that provides us with a wide range of products from direct lending, whole loan note buying, and A/B structures,” notes Masters. “Our lender finance strategy additionally provides warehouse and term financing on a senior basis that adds an extra dimension to our operations.”

Churchill implements an innovative lending approach premised on ideally located, downside-protected real estate assets and strategic transactions with risk-mitigated capital structures. The team exhaustively analyzes each potential transaction, weighing

Churchill’s differentiator is our diverse capital and investor base that provides us with a wide range of products from direct lending, whole loan note buying, and A/B structures. Our lender finance strategy additionally provides warehouse and term financing on a senior basis that adds an extra dimension to our operations.

many factors such as basis, riskreturn parameters, and sponsorship. The vertically integrated nature of Churchill enables the company to efficiently consider all investment perspectives across the life cycle of a given transaction—including

identifying lucrative opportunities, initial acquisition, re-positioning/ development, stabilization, and disposition. Thanks to Churchill’s extensive industry experience in development and asset management, they realize the value of adopting a proactive, hands-on approach in all deals with the end-goal of innovatively unlocking value and fueling asset-level expertise. The results are undeniably effective. “Company growth in 2022 has been tremendous with billions of RTL loans funded this year and we are already expanding our Charlotte office because of this growth,” says Masters.

Churchill Real Estate: Continues on pg. 12

From Left to Right: Justin Ehrlich; Derrick Land; Sorabh Maheshwari; Travis Masters

Harnessing the Tech Edge

In today’s digital era, tapping into technology-enabled adaptations to solve problems and streamline workflows is the standard operating procedure in virtually every industry— the lending space is certainly no different. What makes Churchill unique, however, is their aggressive integration of emergent technologies, such as the blockchain, to provide true value to their customers. “Historically, we have focused our technology development on the investor experience and investor services. Our technology platform covers our entire business from onboarding and underwriting to performance monitoring and investor reporting,” observes Masters. “These have proven extremely productive. We are working on releasing new platform applications to our entire loan and lender finance partners early next year to further increase the quality

of the end-product delivered to our clients. We rolled out a seller portal to improve efficiencies when transacting with Churchil on whole loan sales, which allows loan sellers to upload loans, view their pipeline, and monitor the status of their loans.”

Churchill additionally realized that new blockchain-enabled applications could leverage to effectively add ress critical sticking points that

wholesale lenders experience daily and greatly enhance the efficiency of lender-to-lender due diligence, disposition, and settlement of loans. “We invested in a blockchain company and are deploying blockchain-backed applications for our securitiza tions and our investors, including tokenization of mortgage assets and ledger recording of performance data,” explains Masters.

Churchill generated a record-setting origination volume of $1.25 billion in the first quarter of 2022 alone. The added scalability attributable to the incorporation of a private blockchain-enabled ecosystem will further augment Churchill’s ability to expand their operations within the business purpose lending space and take on even more volume.

For more information, please visit: https://www.churchill-realestate.com/

Churchill Real Estate: Continued from pg.

From Left to Right: Derrick Land, Travis Masters, and Sarper Beyazyurek in the Charlotte Office

Charlotte Office Team Members

By Mark Dewyea, Contributing Writer for Originate Report

CIVIC Financial Services has emerged as a leading private money lender focused on providing innovative funding solutions for non-owner-occupied residential investment properties. Originate Report had the privilege of catching up with CIVIC President William Tessar to get his take on the current situation in the lending industry and how his company leverages its unique corporate culture to deliver superior results to its growing customer base.

What were the most significant developments during 2022 within the lending industry and how did CIVIC adapt to them?

It is no secret that highly volatile interest rates have dominated the headlines within the lending industry this year. In over four decades of ex perience in the financial marketplace,

Enriching Communities: CIVIC President William J. Tessar presented Tara Nierenhausen of Community’s Child with a donation to help the organization’s commitment to providing safety for homeless women with infants. As part of Lending With Love, CIVIC donates a portion of each loan funded to a different organization every month, as chosen by its team members.

I have never seen them fluctuate so rapidly in such a short period. As the market went through the interest rate turmoil, we saw an increase in our investor and broker clients. Our uninterrupted funding during this time created a pipeline that grew to just under 2,000 loans—adding a proportionate amount of pressure organizationally on CIVIC to service the dramatic uptick in volume. We emphasized supplementing our team with quality talent and going the extra mile for our growing custom er base, leveraging our decades of collective experience to adapt to the shifting dynamics while integrating technology to streamline our work flow and optimize efficiency. Most of our team members have the requisite discipline and familiarity within the conventional lending market, which translates into our outstanding loan performance.

The overwhelming majority of lenders were interdependent on Wall Street and the secondary marketplace, which drastically inhibited their ability to sell loans. This subsequently resulted in margin calls, widespread pauses on lending, and restructuring of capital bases. Fortunately, this was not the case at CIVIC. Being poised beneath the umbrella of a publicly traded bank has allowed us to balance sheet the originated loans and not subject ourselves to that secondary market dislocation. We have approached loan originations with Quality, Quantity, and Consistency, and doing so under this model has enabled us to grow exponentially over the last two years.

Our ability to deploy capital through our lending operation truly sets CIVIC apart from the competition. We provide our client base with an unparalleled peace of mind in knowing that our independence from external funding sources translates into unmatched reliability no matter what happens on the larger economic scene. We consistently lent through COVID-19 and have continued business as usual, all the while originating under interest rates significantly higher than they were at the beginning of the year.

The 21,000+ loans we have closed at CIVIC remind our investors that we show up when they expect us to.

What do you think 2023 and beyond has in store for the lending industry?

I foresee rates continuing to rise throughout the initial first quarter of 2023 before finally leveling off and stabilizing. As soon as some modicum of stability establishes on Wall Street, more players will enter

The CIVIC Difference: Continues on pg. 16

The CIVIC Coin: Highlighting the company’s core values on one side, and core purpose on the other, CIVIC team members are proud to show off their CIVIC coin.

People First: CIVIC’s EVP of Operations Merced Cohen and President William J. Tessar award a CIVIC team member with the company’s High Rise Award an esteemed, peer-nominated award. The lucky winners receive the coveted High Rise trophy in addition to $1,000.

the lending marketplace and drive collective loan value upwards. In the interim, the conventional lending business will continue to struggle amidst the elevated interest rates, leading to further consolidation within the marketplace. At the same time, these dynamics will present opportunities within the business purpose loan (BPL) space to augment the decreased occurrence of refinancing initiatives—which is ideal for CIVIC’s plans to continue to grow and scale our lending activity over the next year and beyond.

What makes CIVIC unique from an organizational standpoint?

The CIVIC corporate culture is what distinguishes us as an organization. First and foremost, we emphasize the health and well-being of our employees. We have an entire People & Culture team comprised of staff members whose full-time jobs are dedicated to enhancing the lives of the CIVIC team. Throughout the course of the pandemic when the world shut down, this contingent was pivotal in creating our CIVIC Anywhere initiative, which enabled our employees to take advantage of the inherent flexibility and benefits

of teleworking—whether that was spending more quality time with family, relocating to geographic areas with more a more sustainable cost-ofliving, or enhancing productivity by eliminating unnecessary commutes. CIVIC Anywhere changed the way we approach the marketplace and our people as it simultan eously optimized our productivity and work-life balance, a win-win situation if there ever was one. It is directly representative of what we stand for as a company. The CIVIC core values are the bedrock of who we are as an organization— they guide our conduct on both a macro- and micro-scale, whether that be an individual employee navigating everyday decisions with a client or the front-office staff collectively implementing companywide policies. Our executive team spent 14 months with an outside firm hammering out these core values so they would stand the test of time and provide true value to employees and, in turn, to our customers. Regardless of what is happening in the outside world, if you consciously apply these values every day, you will be a better version of yourself. That is why all our employees carry a coin with these values engraved in them—a daily reminder of what we stand for as a company: (1) Act with honor; (2) Be a great partner; (3) Communicate clearly; (4) Create smiles; (5) Simplify.

For more information, please visit: https://www.civicfs.com/

Partnerships Matter: One of CIVIC’s Account Executives goes on-site to visit his client’s renovation project in Southern California.

Leading By Example: A conference room wall at CIVIC’s headquarters in Redondo Beach, CA dawns the company’s core purpose.

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PRIVATE LENDING TITANS

Jeffrey Tesch

CEO, RCN Capital LLC

Jeffrey Tesch CEO RCN Capital LLC

Q: Why did you choose Private Lending?

As a real estate investor, I had used pri vate money in the past and was aware of the pitfalls of using hard money. I had known a wealthy gentleman who owned a software company for many, many years. In 2010, we got together to discuss the state of the real estate investing world, and he was very intrigued by the prospect of building a company that would take hard money and professionalize it into a more elevated commercial lending pro cess. The mandate that I had from 2010 when we formed RCN Capital was that we would elevate the hard money lending business and create an experience where our customers and employees would both be proud of the product we were going to deploy into the marketplace.

Q: What is your current role and what do you do day to day?

I am the CEO of RCN Capital. Overall, it is my role to oversee the C-Suite officers who run and oversee the company’s dayto-day operations. I spend a great deal of time on strategic planning, as well as promotional efforts to elevate our prod ucts in areas of the industry that often

do not understand the benefits of using private lending as an investment tool in a dynamic marketplace.

Q: What excites you about your role today?

This answer would not be just for today but for as long as I have been the leader of RCN Capital. What excites me most is seeing the opportunities we created and continue to create for our employees as the company evolves. It gives me im mense satisfaction to see both our sea soned employees and our newer employ ees’ contributions to the organization and the tremendous growth that RCN employees have made in their careers within our amazing company.

Q: Can you explain a time where you faced adversity or had struggles early on in your career? Where did it all begin?

How did these experiences mold and shape you into the leader you are today?

I began my career owning Subway restaurant franchises. As a small busi ness owner, there was no backstop if you did not generate enough sales to meet your expenses. The reality of be ing a small business owner out of college gave me the experience of knowing that it was all my responsibility, meaning if I could not find a way to make sure that each location was profitable, it not only put my business at risk but the stability of my employees at risk. At the end of the day, it was always about making sure that the customer was satisfied. Being in a retail operation out of college taught me from day one how to make sure that not only the management, but all team members, provided that level of service. While direct customer interaction at a restaurant versus customer interactions at a loan origination business may seem different, the lessons I learned in that role have helped me build RCN into the

powerful platform that provides capital to investors across the country that it is today.

Q: Is there anything that you wish you could go back and tell yourself at the beginning of your career?

I would say the one lesson I learned over my career is that in real estate, even though markets fluctuate up and down, there will always be long-term appre ciation. If you are a real estate investor, figuring out ways to hold at least some assets long-term is always the right move.

Q: Who is someone that has had a significant effect on your career and why?

From the very beginning of forming RCN Capital, the equity owner Don Vaccaro showed me the value of work ethic com bined with employee engagement. Don is a self-made man who built a software company from the ground up with little to no experience in software develop ment. He was always figuring out a way to provide a better service to the customer, as he believed that led to more sales. I realized that building a private lending platform that would take a marginalized product known as hard money and turn it into a national platform that would elevate the standard for investment lending was a very similar process. He taught me the importance of having the employees always matter at all levels of decision-making. That was truly the greatest lesson of all.

Q: What has been your favorite aspect of being in private lending over the years?

My favorite part of being in private lending is watching the growth of the employees who have built our tremen dous RCN Capital. Directly behind that

Jeffrey Tesch: Continues on

would be the relationships I have made across all facets of the private lending industry. Competitors, vendors, brokers, correspondent lenders, and customers have become more than just business re lationships and are true lifelong friends. I am not sure if other industries have the same level of caring and respect for each other as we do in private lending. It is something that never should be lost on anybody who has the pleasure of work ing in our industry.

Q: What would you consider to be the highlight of your career thus far?

The highlight of my career was with RCN Capital’s senior leadership team to navi gate a complete shutdown of lending at the beginning of COVID and our ability to keep all our employees employed and engaged during that period. At the beginning of the pandemic, we truly did not know where the real estate investment industry would go. We knew that our leadership team owed it to our employees to find a way to make sure that when the investment land scape shifted, we were ready to not only resume lending but gain market share so there would be more opportunities for our team. It was the darkest of days, but it ended up being the most rewarding of times.

Q: What do you enjoy most about your job? Least?

As the leader of RCN Capital since its inception, I enjoy seeing our ability to provide opportunities for our employees and truly set a standard in the industry for how private lending transactions should be completed. However, as the demands of the CEO to add value to conferences across the nation increases, travel becomes difficult, especially at

certain times of the year. It weighs on me greatly to have to be away from home for extended periods of time.

Q: Is time or money more valuable and why?

Over the years, I have had the pleasure of seeking advice from many retired busi ness professionals. Without a doubt, each one of them has advised me to live every day as if it was my last. Each of these mentors has stressed to me that time, in the end, is your most valuable asset.

Q: How do you make sure your company stays ahead in this industry?

The analogy I often give to my employees is as follows: when you drive down the road, you typically choose a gas station that is well-lit, clean, has working gas pumps, and an inviting store attached if you need necessities. Typically, this gas station is not the lowest price in that community. However, the lowest-priced gas station is usually dimly lit, maybe run down, and does not have an inviting or well-stocked store. Sure, the price of gas might cost a couple of cents less, but is that worth the inferior experience?

I give this analogy is because like fuel, money is a commodity. Folks choose the best level of service if the price is within reason. It is our job as a lender to ensure we always have the best level of service so that when a customer is looking for a loan, it is clear they will have the best possible experience.

Q: What tools do you use to aid you in your role to be most efficient, organized, and focused?

One of the tools we use across RCN Capital is the Calendly app to schedule appoint ments. This has proved invaluable across the company so that folks who want to get in touch with you have an easy and seamless way to make appointments.

Q: Has your role changed significantly to address the current environment? In 2022, I have spent a much larger por tion of my day-to-day focusing on capital relationships. In 2021, the industry saw an influx of capital that provided many originators with multiple avenues of fi nancing sources. It has always been my belief that relationships, especially when it comes to long-term capital commitments, make a difference. We have always chosen not the quick trade but the solid partner to drive our business forward.

Q: What advice would you give to someone who has just started out in private lending?

Depending on what role they have chosen, I would always remind them that at the end of the day, the customer will drive your success. Whether you are servicing an internal customer or working with external clients, their perception of your level of commitment and service to them will lead you to greater opportunities in the industry.

Q: How will private lending change to adapt to the current market trends?

In today’s liquidity-driven environment, the lenders that focus on liquidity and make it their top priority will have the most success. At the end of the day, the fuel that drives our business is being able to replenish capital on a never-ending basis. Any interruption in this capital can cause serious complications in the origination model. Being a good partner and focusing on both providing loan volume and quality loans is paramount in today’s environment. To be that good partner, you must focus on quality originations at all costs.

For more information, please visit: https://rcncapital.com/

Themes are subject to change.

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An Insider’s Perspective of the Private Lending Space

WITH ARIXA CAPITAL’S JAN BRZESKI

By Mark Dewyea, Contributing Writer for Originate Report

With 2022 soon ending, now is an ideal time to reflect on some of the key challenges the past year has presented and anticipate what trends the coming months have in store for the lending industry. Originate Report recently caught up with Jan Brzeski, Managing Director and Chief Investment Officer at Arixa Capital, to get an insider’s perspective on the present outlook of the private lending sector and how his organization plans to sustain its impressive track record of success in the future.

What is your outlook for private real estate lending?

The following year will be challeng ing for Arixa’s borrowers, comprised of real estate investors and develop

Jan Brzeski Managing Director & Chief Investment Officer, Arixa Capital

ers who focus on sub-institutional sized residential projects, including for-sale housing and for-rent apart ments. They are seeing higher con struction costs, much higher inter est expense, and declining values.

For apartment projects, owners who want to refinance out of our shortterm loans to hold projects for the longterm have an opportunity to do so; however, higher rates mean low er proceeds on the take-out loan, so they may need to source additional capital to retain the properties and continue generating an optimal prof it margin. The Arixa Capital team has years of experience providing in sight to these clients to assist them in navigating transitions between short- and longer-term financing. But there is an upside to the current market dynamics: we still have a

housing shortage, and roughly 2% of all the housing stock in the U.S. be comes obsolete every year, assuming a 50-year average usable life. That means there is a huge need for devel opers who can reposition or redevel op properties, especially urban infill properties close to the best jobs.

I am confident that some much-need ed stability will gradually return to the real estate industry soon. Private lending should resume growth after an adjustment period and some dis location in the next 12-18 months.

What are the greatest opportunities you see within the lending space and why?

In our segment of lending to borrowers who focus on noninstitutional projects, I think our

industry is still in its infancy. I compare it to fast food in the 1950s: there are plenty of places to buy a hamburger, but nobody has really developed a formula to replicate a very good, consistent experience across many major metro areas. Our competitors are mainly local players that differ significantly from one market to the next in terms of the scope and quality of services they provide to potential clients.

The greatest opportunity for Arixa is to continue executing over the next 12 years, just as we have in the past 12 years, and consciously control our growth rate without sacrificing quality for quantity. There is nothing to be gained in trying to become a national player

Arixa Capital's Team

overnight. Our goal is to provide an optimal lending experience for each client, encouraging them to return for all their funding needs, which will subsequently enable us to be able to keep on distributing steady returns to investors and sustainably grow and scale Arixa’s presence on the national lending marketplace.

What are the greatest challenges you face and why?

The main challenge for Arixa is the unprecedented rise in interest rates, and the speed with which they have risen, which affects lenders in two primary aspects. First, it puts pressure on real estate values, affecting our borrower’s profitability from preexisting investments. Second, investors expect higher returns from our private debt funds because their other fixed income options are suddenly offering much higher yield. Even banks are offering 4.5% on some CDs right now. One year ago, 2% would have been considered a very high return for a CD. However, many investors still value what private real estate debt funds offer. We have made encouragingly consistent positive returns for our investors in the past

year, even though most alternative investment vehicles have delivered sharply negative returns.

What are the primary concerns for the private lending space in the near future?

The biggest risk to our overarching lending strategy is a potential rapid, substantial decline in value on the types of properties and locations where we lend. Our typical loan would take a 25-30% decline in

value over a year or two to lead to principal losses. That is still unlikely on residential properties in major urban infill coastal markets where we are actively lending. The runup in values during the COVID-19 pandemic makes a more pronounced and rapid decline something that we must be more mindful of than we would typically be. Our mantra is to be vigilant and protect our track record in the next 12-18 months. We are confident that our lending strategy adequately mitigates any residual risk and ideally positions us to continue to deliver optimal results to our client base.

For more information, please visit: https://www.arixacapital.com/

Jan Brzeski

The greatest opportunity for Arixa is to continue executing over the next 12 years, just as we have in the past 12 years, and consciously control our growth rate without sacrificing quality for quantity.

GERACI

GOOD RIDDANCE

By Eric Abramovich, Co-Founder & Chief Credit Officer, Roc Capital

The Charles Dickens quote, “it was the best of times, it was the worst of times", aptly describes the COVID-induced tumult unleashed upon the private lending industry. Had this been penned as a reflection of 2021, less than 12 short months ago, this piece would have been raving about record volumes and surging profitability. The looming menace of surging inflation was nothing more than a fleeting annoyance deemed transitory by the experts, but today, we find ourselves in the shadow of its winter. We will

forever remember 2022 for the whiplash that COVID brought upon our space.

In 2019, the industry was just starting to find its footing, with institutional capital increasingly willing to provide liquidity and a housing market buoyed by a lack of supply as far as the eye could see. March of 2020 was the first real post - great financial crisis test for the industry when a novel virus caused the shutdown of the US economy. There were not many sectors spared from

the initial jolt, and lenders certainly were not immune, despite the dizzying monetary policy printingprovoked surge that was soon to follow. Nevertheless, the damage was done, and many of those lenders that faced liquidity challenges early on withered away and were relegated to second class status even as markets quickly recovered.

A group of well-positioned lenders emerged as frontrunners, but the short-lived nature of the initial shock reincarnated even the ravaged

players to resurface and compete (often by offering a looser credit box or below market rates). These euphoric times were also not long for this world. In early 2022, markets came to the realization that the Fed had to stamp out inflation and was about to embark on one of the most aggressive and draconian tightening cycles in its history, replete with simultaneous interest rate and quantitative tightening (QT) measures. As if this were not enough, they were doing this when every other central bank was

making similar moves, soaking up worldwide liquidity. Interest rates surged so quickly that it left lenders scrambling. The spectrum of responses was varied, but those denialists that chose the path of inflexibility in the face of rising rates paid the price, eventually forced into selling their loans below par or even worse, caught with loans and their now impaired balance sheets, while others still were driven into bankruptcy.

As the year progressed, liquidity be came even more scarce. Institutional capital poured out at a furious pace, reversing years of flooding. The securitization markets eventually froze up, not necessarily because the world’s deepest-pocketed institu tional investors lacked interest in sourcing real estate investor loans but because the market became crossed. Borrowers were not yet ready to pay rates that were now “market”, so volumes declined across the space. As mentioned, many lenders had not rate-locked or hedged their loans and had to sell loans to loan buyers or into securitization SPVs at a discount. Some thought that insurance company capital would save the day, as though such magical capital is naive to market forces and relative value investments. As sure as the last tree leaves eventually succumb to winter’s relenting frosts, most lenders realized that it made little sense to originate loans at below market rates, often lower than the prevailing rate of inflation. After

relentless battering and aside from a few shallow unnatural pockets of capital from callow venture-backed tech bros, we now observe a pricing discipline across most actors in the space.

While the fiercely opposing forces of low housing supply and affordability make a housing crash unlikely, private lenders are left wondering what needs to crack for their origination machines to crank back up again. If prices remain elevated but relatively stable, and the market shifts from the bidding wars of yore to a “buyer’s market", that is a decent environment for buy-rehab-sell investors. Rents have historically lagged house price appreciation by as long as two years, so landlords, too, can find solace for the higher financing costs with viable DSCRs, (debt service coverage ratios), supported by rising rents. With COVID headwinds of higher labor and material costs subsiding, perhaps tailwinds will begin to emerge. Beyond the linear thinking of assuming today’s pain will persist forever, perspective is also important: projecting today’s conditions into the eternal future has never proven to be a good strategy for predicting and is certain to lead one astray today.

As we saw with the November CPI print, conditions can change quickly. Now approaching the third anniversary of getting on the COVID roller coaster, it is necessary to note that China, the world’s largest

2022, Good Riddance: Continues on pg. 28

exporter, continues its quarantine lockdowns. Ukraine postures that it will push back the offensive of one of the largest military powers in the world and even retake Crimea, annexed by Russia in 2014. Paired with aggressive QT, corporate lay offs, supply chain reinforcements, excess inventories, forecasts of a warmer than usual winter, and the potential reversal of China/ Russia/Ukraine-related issues - is it unreasonable to think that inflation might wither away? Perhaps the experts were right in calling it transitory inflation, but they were too anxious and impatient to define its slightly longer duration. It is not like there are no other modernday examples offering hope on the inflation front. For example, Japan has stuck to its zero-interest rate policy (ZIRP) for over 20 years,

with today’s inflation rate in the 2% range (like the US pre-Covid), even after much more substantial money printing than the US (Japan’s Debt to GDP ratio today is 237%; whereas, it is 107% in the US). Whether or not inflation persists, we can be sure that the chances of a smooth landing seem slim after practically every human being on the planet simultaneously quarantined for years.

Here at Roc Capital, we are taking the long view, and there is much to look forward to. Real estate investors have a history of transacting through all market cycles, and they will continue to do so and need financing as they rejuvenate the nation’s aging housing stock. We look forward to the continued institutionalization of our asset class, with rating agencies likely to begin rating RTLs (residential transition loans) as early as 2023, thus possibly

enhancing liquidity. Even in today’s environment, institutional interest remains high, at the right price, of course. During the end of every challenging market cycle, there are usually periods of great prosperity. We remain steadfast in our mission of delivering innovative products that make it easy for everyone to renovate, own, or invest in homes. We have always focused on ensuring the resilience of our balance sheet and funding capacity, and even though it is impossible to “fight the Fed", our outlook is undeterred, and we continue to invest in technology and products that will help power the future of our industry. On the origination front, we continue offering the same products and services and have doubled down on our commitments to our origination partners.

To end on a somewhat optimistic note, I will misquote Winston Churchill in describing the phase of the market where we find our selves today: “Now this is not the end. We are now past the end of the beginning. But we are, per haps, now at the beginning of the end.”

Co-Founder & Chief Credit Officer Roc Capital

Eric Abramovich

Lisa Alberti

Senior Vice President, Note Finance Division Western Alliance Bank

Q: How many years have you been in Private Lending and why did you enter this field?

I was a Finance major at Tulane University, which ultimately led me to a career in banking. I have worked in banking for over 20 years and have been working with private lender customers for just over three years. For the past seven-plus years, I have worked for Western Alliance Bank (WAB), a publicly traded bank headquartered in Phoenix, Arizona. Western Alliance is unique in that we have a division that focuses solely on the banking needs of Private Lenders (Note Finance). I have worked with that group for the last three years.

team in Nashville, Tennessee. From there, I transitioned to SBA lending on the West Coast for about ten years.

Q: What do you do for your firm? How do your contributions affect your company at large?

Alliance Bank focuses on providing superior customer service to attract and retain customers, and I am proud to be a part of the team.

Q: How have you seen your company grow in spite of or because of current market conditions?

With Western Alliance, clients have access to decision-makers and true relationship banking through a single point of contact. We are known for our responsiveness, which is critical during uncertain times. My colleagues and I have the authority to make prudent lending decisions quickly, with the power to cut through the red tape that just does not happen at large money center banks.

Q: What are some of your goals for 2022 and beyond?

Q: Where did you get your start?

Directly after college, I went into a management training program with AmSouth Bank, (now Regions Financial), in Birmingham, Alabama. After the training program, I elected to take a position as a Credit Analyst for AmSouth’s Commercial Banking

I am the Senior Vice President of Western Alliance Bank’s Note Finance Division. I manage the West Coast portfolio for the Note Finance Division and act as the “quarterback” for our customers’ needs, whether it be an increase to an existing credit facility, opening new bank accounts, or day-to-day portfolio management. I collaborate with our Phoenix-based credit and operations teams, and I am responsible for growing the portfolio by sourcing new clients that need credit facilities and treasury management services. I also lead some of the marketing efforts for the team by coordinating participation in industry events as well as planning and organizing client events. The entire Note Finance group at Western

It is exciting to be part of Western Alliance Bank, which is experiencing consistent growth as a commercial bank thanks to our national resources and reputation as a trustworthy financial institution that provides exceptional service tailored to each client. My personal goal is to continue to provide best-in-class customer service and innovative solutions to both existing and new customers. Strong and steady wins the race!

Q: What does success look like for you?

To me, success means being able to achieve your personal and pro fessional goals as well as contribute to the success of others. The days I

Lisa Alberti: Continues on pg. 32

feel most successful are when I am energized to start the day and have enjoyed my interactions with my customers and colleagues, deliv ered superior service, and hopefully shared a laugh or two along the way. It is also super important to celebrate the small achievements as well as the big ones.

Q: What is something most people don’t know about you or your company?

With more than $65 billion in assets, Western Alliance Bancorporation (NYSE: WAL) is one of the country’s top-performing banking companies. Western Alliance is ranked the #1 topperforming large bank with assets greater than $50 billion in 2021 by American Banker and Bank Director. Many people do not know that Torrey Pines Bank (Southern California), Bridge Bank (Northern California), Bank of Nevada (Las Vegas), First Independent Bank (Reno), Alliance Bank of Arizona (Phoenix), and Alliance Association Bank are all parts of Western Alliance Bank.

Q: What steps are you or your company taking today to make an impact on the industry?

Overall, Western Alliance Bank is different because we offer private lenders the resources and sophis ticated services and solutions of a national bank along with the focus and expertise to deliver thoughtful, sector-specific banking. We are known for flexible, customer-tailored solutions and best-in-class personal service that private lenders can rely

on. Our customers count on us for speed and certainty of execution, which are both critical in today’s dynamic economy.

Q: What piece of advice did you personally receive early in your career that has helped shape decisions you’ve made?

Early in my career, one of my managers encouraged and pushed me to take chances. If it were not for him, I would never have transitioned from underwriting to sales. His support and leadership were critical to changing my career path, and it has been an adventure!

Q: Tell us about a person or organization you admire. How have they made an important impact on you, the industry, or the world?

I worked in SBA lending for several years and assisted small business owners and entrepreneurs with purchasing real estate for their businesses. I have always been inspired by the courage and tenacity of small business owners. Their grit and perseverance are admirable.

Q: Are you involved in any associations, networking groups, or the like that have influenced your career path?

My career has varied in terms of types of banking. I have always

become involved in the applicable industry and networking groups for each niche. Specific to private lending, I have found the American Association of Private Lenders (AAPL) to be hugely beneficial as a source of general industry information and for networking. I also, of course, must mention the Women in Private Lending (WIPL) group that formed in late 2021. It has been a great experience to be among the Founding Members of the group and connect with other women in the industry.

Q: If you had a clean slate to start over and do anything you wanted to do, what would that be?

I always thought I wanted to be a veterinarian, but that clearly was not my path. I love to travel and visit new places, so something with travel journalism would be fun.

Q: What is the best advice you could give someone thinking about making a leap into Private Lending? Ask questions and network as much as possible! Private lending is a very niche space, with every lender being slightly different. Meet as many people as possible and start building your network by attending events such as AAPL and Geraci conferences.

For more information, please visit: https://www.westernalliancebancorporation.com/

To me, success means being able to achieve your personal and professional goals as well as contribute to the success of others.

Streamline Funding

PROVIDING THE DRY POWDER OF CAPITAL

By Charles Peckman, Contributing Writer for Originate Report

“Everyone has a plan until they get punched in the mouth.”

This quote from boxer Mike Tyson is how Romney Navarro would describe the year 2022 for real estate professionals.

Navarro, the CEO of the Austin-based Streamline Funding, began his career before the 2008 Financial Crisis and knows the ins and outs of navigating precarious marketplace situations.

To better gain insight into ‘the year as it was’ for Streamline and the

lending space, Originate Report sat down with Navarro to discuss how the group continuously adapts to a changing marketplace.

Established in 2002, Streamline Funding has a clear mission: to empower real estate investors with the resources, flexibility, and exper tise to grow businesses and achieve financial freedom. Through estab lishing partnerships with a network of experienced real estate entrepre neurs, the Streamline Funding team continues to see unprecedented growth in its loan programs.

Currently, Streamline offers loans for single-family, multifamily, fixand-flip, and residential bridge properties. In addition to lending in their home state of Texas, Streamline offers its services across the United States.

Navarro said that in his mind, the ‘name of the game’ is perseverance, resilience, and innovation when successfully building lending programs across the country.

“The early days of so-called “hard money” lending were in many ways

the Wild West,” Navarro spoke. “The pricing was unheard of, and those loans were reserved for people with no other outlet. Where hard money originated in our DNA [at Streamline] was very much for the opportunistic investor, the person with that entrepreneurial spirit.”

When faced with a period of economic downturn, such as the 2008 crash, Navarro stated that the ‘fear on the sidelines’ led many to rethink sources of capital and embrace the flexible terms of private lending.

“As we exited the recession, we started raising more capital and, in turn, funded more loans. This is one of the things that is unique about this business. It leads to the perseverance I was talking about earlier,” he commented. “When the spring comes, the flowers start to blossom again.”

But this period of blossoming, however, was not without its pitfalls. Navarro explained an environment in the early 2010s where many players,

Left to Right

including institutional-level groups, were in a ‘race to the bottom’ with their pricing and services offered.

“There were many small players. Someone who knew someone from church and larger companies realiz ing that there was a move to more decentralized capital, and all the deals looked the same – it was all fixand-flip,” he recalled. “With those markets opening and more people buying, at Streamline, we created a blue ocean inside this red ocean where everyone was fighting over the same chunk. That blue ocean,

where no one else was looking, was construction.”

Because of an influx of Wall Street money, Navarro remarked the fixand-flip product became commod itized. “This new construction element allowed Streamline to grow from around $18 million to over $100 million,” Navarro said. “There is always an element of risk-taking when entering a new space, but Streamline has always been able to adapt to shortfalls in the mar ket and create value for borrowers. With so much Institutional money in our space today, and faced with a changing marketplace, there are bil lions and billions of dollars that are saying ‘use me,’” he added. “We are trying to take that influx of capital and attention on the space and use that to innovate.”

What this looks like, Navarro answered, is ensuring that borrowers have the ‘dry powder’ necessary

Streamline Funding: Continues on pg. 36

Alesondra Mora, AVP of Marketing at Streamline Funding; Jadon Newman, Founder & CEO at Noble Capital; Yariv Omer, CEO at Reigo Investments; Romney Navarro, CEO at Streamline Funding

When it comes to ‘stocking the armory’ or making sure that borrowers have that dry powder, Navarro expressed that Streamline focuses on ensuring that every stage of the lending process is stacked with top-tier talent and has the tools needed to succeed.

to make sure that no property be comes a ‘could have, should have, would have.’

“As long as you have that box, Wall Street will fund your deal,” he responded. “What we are trying to do at Streamline is not necessarily expand the box, but perhaps paint the box, so it is a little more valuable to the borrower. It is not one loan anymore – it is about creating generational wealth. That is innovation today.”

When it comes to ‘stocking the armory’ or making sure that borrowers have that dry powder, Navarro expressed that Streamline focuses on ensuring that every stage of the lending process is stacked with top-tier talent and has the tools needed to succeed.

“That success is not guaranteed, though. As a small fund manager, what we are seeing now is that market values are changing. Property A is now worth 15 percent less than it was yesterday,” he noted. “We must practice resilience because that price change is compressing my portfolio. I always strive to avoid that carnage that impacts other players in the field.”

To avoid that carnage and ensure the continued growth of Streamline, Navarro mentioned that it is crucial to adapt to new technology and trends in the environment. Without

that sense of adaptation, or a team in place to collaborate on new ideas, Navarro observed that those lenders are doomed.

gotten smaller. At Streamline, we are ecstatic about the opportunities on the horizon.”

“I think the groups and players that will survive in this new marketplace are those that start thinking about scale. Those that can refine their craft and truly take a step back and holistically look at the market,” he replied. “Inside compression comes opportunity, and our world has

To learn more about the services offered by Streamline Funding, visit streamlinefunding.com.

For more information, please visit: https://streamlinefunding.com/

Streamline Funding: Continued from pg. 35

Steamline Funding Event

Romney Navarro

Optimizing the Private Lending Experience

A CONVERSATION WITH SUPERIOR LOAN SERVICING CEO BARRY HARARI

By Mark Dewyea, Contributing Writer for Originate Report

Superior Loan Servicing originated in 2009 with the overarching goal of offering the best loan servicing experience in the private lending industry. Their team provides a unique and highlyeffective blend of highly-responsive customer service and operational expertise garnered from decades of combined industry experience— allowing them to leverage key insights and advice to be a true value-add to their rapidly-growing client base around the country.

Originate Report had the privilege of catching up with Superior Loan Servicing’s CEO, Barry Harari, to get an insider’s perspective of the keys

to his organization’s consistent track record of success as well as his take on some of the most pressing issues in the private lending industry.

Custom-Tailored Lending Solutions

Sometimes it takes being fully immersed in a system to accurately identify areas for improvement and acquire the skills needed to imple ment changes. That was certainly the case for Harari, who was able to identify major shortcomings in the lending space as an active participant in the system—a realization that compelled him to start his own company to fill these institutional gaps. “I was an active investor in

Barry Harari President & CEO, Superior Loan Servicing

private money notes for years and found the existing servicing solutions offered at the time to be less than ideal,” explains Harari. “I believed I could build a superior alternative by incorporating key components

that I felt were lacking from other company’s offerings—that led to the genesis of what has become Superior Loan Servicing.”

One of the main areas of emphasis for Superior Loan Servicing is developing innovative funding solutions geared towards addressing the individual needs of every client. “Our services are significantly more customizable and specifically-tailored to our customers’ servicing needs,” notes Harari. “As a seasoned investor, I recognize that no two transactions are exactly alike. Each deal is unique in some aspect, and the team at Superior Loan Servicing actively engages our clients to identify their individual concerns and requirements so we can develop the most efficient and effective financing approach.”

Adapting to a Changing Environment

The past few years have been rife with unpredictability and constant market fluctuations as the global economy continues to evolve in a post-pandemic era. This has presented lenders with a complex challenge as they fight to remain ahead of perpetually evolving trends and stay in-tune with clients’ needs. “Market volatility continues to be the most substantial challenge facing the collective private lending industry,” observes Harari. “It appears that the continual up and down cyclical nature of the financial markets are here to stay for the long-term and lenders must be flexible and able to adapt in order to continue servicing loans in a sustainable manner.”

Lenders have had to adapt to this new environment to ensure continuity and mitigate risk, a process that Superior Loan Servicing has prioritized as they continue to grow and scale their operations. “We have adopted an ultra-conservative approach to our internal capex and operational execution,” reports Harari. This has enabled us to position ourselves favorably from a balance sheet perspective which will further allow us to weather future storms of uncertainty without impeding our ability to continue servicing operations at full capacity.”

Strategically Planned Partnerships

Superior Loan Servicing also selec tively targets potential clientele to ensure compatibility and productivity. “We actively pursue originators and aggregators with portfolios ranging from 100 loans all the way up to 5000 loans,” explains Harari. “By focusing on clients with substantial portfolios, we can allocate the required resources to help transition them onto our platform and help them thrive in the marketplace. We also target funds and institutions that are scaling their lending portfolios and provide consistency of service and pricing as their business expands.”

This approach involves a highly involved vetting and analysis process when identifying new business opportunities. The extra work on the front-end allows Superior Loan Servicing to increase operational efficiency and manage potential

risk. “Maximum engagement is essential in the early stages of any working professional relationship,” Harari says. “By taking the time to fully learn and comprehend a potential client or partner’s business model and identify the challenges and main sticking points they will encounter along the way, we can more effectively evaluate whether we can be a true value-add partner in their ecosystem—which is ultimately the determinate factor as to whether the partnership will be viable from a long-term perspective.”

Superior Loan Servicing is proactive ly engaged in doing everything possible to stay at the forefront of the lending industry, constantly looking for ways to bring more value to their clients and improve the end-product they deliver. “We see technology having a greater impact on servicing trends within our industry, which include more do-it-yourself capabilities for our lender clients that enable them to exercise a greater degree of control and oversight in managing their loans,” predicts Harari. “Accordingly, Superior Loan Servicing is investing heavily in engineering our own internal software platforms to bring these in-demand conveniences and technology to market as soon as possible to optimize user experience and productivity.”

For more information, please visit: https://superiorloanservicing.com/

DID WE PREDICT CORRECTLY?

By Anthony Geraci, Esq., Geraci LLP

Every year, the team at Geraci makes predictions about the year ahead and we revisit those at the end of the year. Every once in a while, the market changes in such a way that we also do a midyear outlook. In May of 2022, I wrote an article on how the rest of 2022 would shape up.

HOW DID I DO?

LET US DISCUSS BELOW:

Did interest rates continue to rise?

In May, I stated that there was no question interest rates would rise, and boy was I right. Interest rates increased by 3% (or 300 bps) from

when the Feds met in June until the writing of this article (mid-October).

Just as glaring, they will continue to rise, as I expect both meetings will increase the interest rates by 1.25% to 1.5% in the next 2 months!

Did Interest Rates pass through to the Private Lending Market?

I said that you would see continued upward pressure to increase yields on the private lending product. As of the date of this writing, we have largely seen a straight pass through in yield, with an increasing average of 200 bps (2%) across all product segments in private lending, which is squarely in the middle of the 150300 bps range I gave back in May!

Was there an uptick in Mortgage Fund Creation?

I anticipated that more funds would start in 2022, and I was right! Our Corporate & Securities department has seen double the number of funds than the previous quarter. Funds are coming back due to lenders’ uncertainty about when Wall Street is buying.

Is Wall Street still buying?

I predicted that even though we would see a reduction that Wall Street would continue to buy, which has been the case. Some shops have stopped buying, which we saw, but

others have picked up the slack with increased rates and yields. While the market is still uncertain, Wall Street is still around.

Are Origination Shops Still being Acquired?

We are still seeing M&A around orig ination shops being bought up, but this has become much slower as the uncertainty has added complexity into the market. Some people are taking the “wait and see” attitude toward it.

Has Owner-Occupied Returned?

Our longest prediction, OwnerOccupied lending returning, has

not yet returned. We shall see how things play out as the year ends.

Was There a Record Volume of Private Lending Transactions in 2022?

Time will tell, but already we have seen billions of dollars originating from our largest clients. Lightning Docs, our proprietary loan document generator, has generated approx imately $1.5 billion in loans since January 2022. It is looking like a record year!

Named to the 2022 Southern California Super Lawyers® list, a designation given to only 5% of attorneys,

Anthony Geraci, Esq., is the CEO and a partner at Geraci, in charge of firm strategy and development of Geraci’s team and culture. He is an avid public speaker and strives to provide peace of mind to his employees as well as to all Geraci clients nationwide.

Anthony Geraci, Esq. CEO Geraci LLP

INDUSTRY NEWS

Red Oak Provides Refi & Redevelopment Funds for Affordable DC Community

Washington, DC — December 1, 2022 – Red Oak Capital Holdings, a Michigan-based commercial real estate finance company, has originated an $8.5-million bridge loan to refinance and rehabilitate a low-rise multifamily property in northwest Washington, DC. The garden-style community, 8th Street NW Apartments, sits on a 0.34-acre site that has been designated as an Opportunity Zone. The borrower will use the funds to refinance nearly $6.5 million of existing debt and complete the restoration of the property.

“A growing number of investors are having a difficult time getting their business plans over the finish line, with the current state of the debt market, rising interest rates and the retreat of traditional capital sources from the field,” said Gary Bechtel, Red Oak’s Chief Executive Officer. “When this property’s owner experienced delayed funding processes with another lender, he opted to come to us instead. The decision was a no-brainer on our end.

“This is a four-time Red Oak borrower with a proven track record of acquiring, renovating, leasing, and refinancing multifamily real estate on which we have provided bridge financing,” he continued. “We were comfortable with the property, its location and its prospects based on the investor’s business and exit plan.”

The three-story community was originally built in 1927 with 38 studio and one-bedroom units. When completed next year, it will contain 41 three-bedroom, one-bath units averaging 750 square feet. Upgrades include new flooring, countertops, cabinets, lighting, HVAC system, bathrooms, and an all-new appliance package and stackable washer/dryers in each unit.

The units will ultimately be leased to residents through the federally funded Housing Choice Voucher Program, which has a lengthy waiting list in Greater DC. As such, said Bechtel, “there is significant potential for value creation due to higher subsidized HCVP rental rates in the Northwest DC neighborhood, especially in the three-bed floorplan that this borrower specializes in creating.”

The property at 5320 8th St. NW is well situated in the upper northwest section of Washington DC, in the residential neighborhood of Brightwood Park. It is in close proximity to retail and transportation and is just 1.5 miles away from the Parks at Walter Reed, the $1-billion-plus mixed-use redevelopment of the 66-acre Walter Reed Hospital campus.

Demand for debt products over the past several years has positioned Red Oak as one of the nation’s leading small- to mid-balance bridge lenders. With extensive funding capacity amongst its various business lines, the firm has more than $400 million of assets under management and commitments from both retail and institutional investors.

About the Company

Red Oak Capital Holdings is a group of commercial real estate capital entities that lends and invests on commercial real estate, raising capital through retail and institutional channels. The national commercial real estate firm is anchored on a strong team that collectively delivers over 150 years of commercial real estate lending, servicing, workout and turnaround experience. Red Oak has established proprietary deal sourcing channels, utilizes institutional quality underwriting and structuring capabilities and has successfully navigated through eight market cycles.