Q&A with Private Lender Brent Truscott, Bloomfield Capital Partners
Thank you for taking this interview Brent. Tell us about Bloomfield Capital Partners.
Bloomfield Capital Partners, LLC is a commercial real estate private equity firm. We focus on value-added and non-traditional financing opportunities in the $2MM to $15MM range. We can lend on projects in all 50 states, and though we don’t lend on vacant land or ground-up construction right now, we will entertain any other commercial real estate project that falls within our lending parameters.
What separates you from other private bridge lenders?
Bloomfield is an institutional quality direct lender focused on the lower middle-market bridge lending universe. From the initial due diligence to drafting loan documents and closing a loan, Bloomfield Capital Partners brings a level of honesty and sophistication that few other lenders in this market can match. Traditionally, borrowers seeking $2MM to $15MM for discounted payoffs, enhanced value acquisitions, or other non-traditional financing had to deal with a myriad of brokers, non-direct lenders and firms that solely relied upon “up-front” fees to justify their existence. Bloomfield Capital Partners is different because we charge market interest rates and points when we close deals, but we do not put any dollars in our own pocket if we don’t perform.
Your rates are 8-13%. What does it take to qualify for a lower rate?
To qualify for lower interest rates, borrowers have to fund larger amounts of equity at closing and the projects must be fully occupied and in great locations. We feel that our rates are more than competitive for the deals that we close, and we have many brokers and correspondent lenders that will attest to our credibility for closing deals at the rates that we state.
Do you have a lending sweet spot?
Though we can lend on all property types, our sweet spot would be on multifamily properties in the $5MM to $15MM range. We’ve had great success funding projects in the Mid-Atlantic as well as the Southeast and Southwest. Obviously, the more equity a borrower is able to put down on a project, the more comfortable we are lending him or her lower rate capital, but there are instances where the intrinsic value of the property is so high compared to the purchase price that we will extend the same types of favorable lending terms without significant new equity.
Your loans may be interest-only or range from partial to full amortizations as well as structured with current pay and/or accrual components. Can you explain the latter and how you determine payment structure?
We evaluate every deal individually, but if a project needs time to stabilize, we can fund an interest reserve so that the borrower can put his or her efforts into improving the property as well as improving cash flow. If a borrower needs to put additional capital expenditures into the project during the term of our loan, we may also allow for a deferred interest component. In this scenario, say a 12% interest rate, we may only require that 9% is paid current and the other 3% is paid when the loan is refinanced in 1 or 2 years. This could allow for current cash flow to be re-invested into the property, increasing our collateral value and improving the ability for the borrower to refinance in a shorter period of time. Payment schedules are always structured in relation to the intrinsic value of the real estate and Bloomfield’s underwriting of existing and potential cash flows.
Can you give us an example of a deal you funded in 2010? What was the borrower’s financing challenge and your solution?
A good example of a recently closed deal is a $5MM discounted payoff that Bloomfield’s capital helped to close. We funded a 50% discounted payoff on a Texas multi-family property that had fallen out of favor with its then-current lender. The borrowers had contributed significant equity to the property via the original acquisition as well as through a series of capital improvements over the past several years. The previous lender gave the borrowers a small window to accept and complete the DPO, and traditional financing was not an option. Bloomfield’s immediate attention to the situation and recognition that time was of the essence helped the borrowers pay off their existing lender, fund additional capital improvements, and provide the 12 to 18 months necessary to place a new traditional loan on the property.
Do you have referral relationships with permanent lenders to help borrowers exit your loans?
We don’t traditionally get involved with our borrower’s take-out loans.
If funded, how long will you give the borrower to execute his/her business plan?
Our typical loan is structured as a 1 or 2 year loan with a 1 year extension. We can tailor our terms to meet our borrower’s needs.
Tell us about your advisory services.
As a corollary to our direct lending business, Bloomfield also has a sister company which provides bank advisory services on troubled residential and commercial development loans. We have extensive in-house experience in real estate development, workouts and dispositions. Though advisory services are a separate company, it does help us to better understand the current real estate market and where there are value-added opportunities that may be a fit for our bridge lending capital.
How did you end up at Bloomfield? What is your background?
I joined Bloomfield after completing my master’s degree at Columbia University. I started out in investment banking and then transferred over to the principal side of the investment world. The majority of my experience is in private equity and M&A with a focus on real estate transactions.
What changes in private financing are you seeing post-financial crisis as compared to before?
We have seen a mass exodus of bridge lenders post-Lehman Brothers. Warehouse lines, asset-based lenders and specialty finance firms have really dried up to the point where we feel that there is a significant void in the private capital market where Bloomfield can provide a solution to our borrowers.
How long have you and the Bloomfield principals been in the industry?
The other principals and I have each spent the majority of our careers in the real estate industry. We’ve each had success completing equity joint ventures, closing note acquisitions and funding bridge loans. Today we’re almost exclusively focused on bridge loans, but in the next few years that may change as the market returns and we may then venture back into joint venture equity opportunities.
What do you do in your free time?
I enjoy getting outside to bike, ski and fish.
Thanks for your time Brent. How should borrowers or brokers reach you to discuss a deal?
They can reach me by e-mail at firstname.lastname@example.org or call me at 248-220-1964.
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