A Message from Larry Lehr
Senior Vice President, Grace Capital Group
Following funding records set in 2005, our first quarter
of 2011 continued on a very strong path. For the first quarter,
Grace Capital closed on more than $50 million in real estate
financing comprised of land, residential condo development and
conversions, all including both senior debt and mezzanine financing.
The second quarter looks even stronger with over $60 million
scheduled to close during this period.
So what is driving our strong funding schedule? First, it helps
that the capital markets continue to be awash in funds that
are eager to participate in the continuing expansion of the
real estate market. Secondly, the nations economic growth continues
to expand at a sustainable level with little evidence of harmful
inflation. Job growth is strong in most regions of the country
and this too spurs demand not only for housing, but for the
commercial space employers require.
we feel most importantly, Grace Capital's growth has been based
on our abilities to underwrite and form structures that appeal
greatly to our lending sources, especially on complex land development
projects. The financial markets have come to rely on Grace's
presentations that allow them to quickly evaluate the request,
saving both the investor and borrower time in developing a financial
structure that works for both parties. Our experience and relationships
developed over the last 25 years ensure our clients the most
productive combination of capital to make their projects successful.
Going forward in 2011 we expect to see a leveling off of real
estate prices to a more sustainable level. Real estate is at
historic highs in both price to cash flows and yield relative
to the Treasury bonds as interest rates move ever higher. We
would expect that overall transaction volume continues at a
pace similar to 2005, but there will be some shift of investor
capital funds to other more diversified investment vehicles.
A great example of one of our solution driven capital providers
is a national firm with terrific programs whose offerings include;
-Both first position and mezzanine financing
-Fast closes to take advantage of quick sales, other lender
-No appraisals required
-Abundant money to put into the market
"[This day} will be the most memorable epic in the
history of America. I am apt to believe that it will be celebrated
by succeeding generations as the great anniversary festival.
It ought to be commemorated as the Day of Deliverance by solemn
acts of devotion to God Almighty...with pomp and parade, with
shows, games, sports, guns, bells, bonfires, and illuminations
from one end of this continent to the other from this time forward
John Adams to Abigail Adams on July 4, 1776
Second President 1797-1801
Note Worthy Closings
and Condo Conversion
Both senior debt and mezzanine financing were
arranged with the same lender for 96% loan to cost for
a 96 unit apartment building acquisition and the conversion
to condo units. Senior debt $15,187,500, fixed rate
24 month term
Mezzanine financing $11,529,400 fixed rate at 10.25%.
Apartment Acquisition and
Mezzanine financing of $8,350,000
was arranged for the purchase and conversion to condos
of an existing
126 unit apartment
property built in 1965.
Land refinance was provided at 50% LTV for substantial
cash out for the acquisition of another asset. The 35.5
acres is approved for mixed use residential and commercial
to be anchored by a regional super market with 104 town-home/loft
Mount Peasant, South Carolina
for a 2 story 14 unit
Apartment Acquisition and
Senior loan $28,000,000
financing $6,874,000 provided 95% loan to cost. Non-recourse
for both the senior loan and mezzanine financing.