Feature Story
Grandbridge Real Estate Capital Remains Stable in a Volatile Environment
By Elizabeth W. Pearce

Despite the turbulence in today’s economy, at least one local lender is enjoying record business. In 2007, Grandbridge Real Estate Capital closed more than $260 million in commercial loans at its Bonita Springs office and expects to exceed that number this year.

Formerly known as Laureate Capital, Grandbridge is among the top three commercial mortgage banking firms in the U.S., with a loan-servicing portfolio in excess of $21 billion and loans in all 50 states. The name was changed late last year after Laureate purchased Collateral Real Estate Capital.

Reintroduced as Grandbridge, but with the same local staff, the company originates and services commercial mortgages secured by retail, office, apartments, industrial and owner-occupied real estate assets on behalf of life insurance companies, pension funds, capital market lenders, Fannie Mae, Freddie Mac and FHA, as well as Grandbridge’s proprietary lending program.

Grandbridge provides long-term, fixed-rate non-recourse loans to some of the most respected owners, investors and developers in the commercial real estate industry. With non-recourse loans, borrowers are not required to sign personal guarantees against monetary default. However, in the 10 years since establishing its Southwest Florida office, Grandbridge has yet to have a single client default.

“We work with excellent borrowers. At the end of the day, particularly in a downturn, they make the difference between a good loan and a bad loan,” says Matt Rocco, manager and loan originator for Grandbridge. “It’s always a matter of who you deal with.”

Qualifying for Capital

“Developers are always in need of capital, whether it’s from an investor or lender,” he says. “But the deals have to make sense from both the lender’s and investor’s perspective, and that’s an important distinction in this market.”

Rocco notes that in recent years, many inexperienced investors purchased commercial property as an alternative to stocks and bonds. Further, the sale price often hinged on what the borrower could finance vs. what the property was worth. “Now, some of them are realizing that commercial real estate is not for the faint of heart. It really is a long-term commitment that requires real capital, management expertise and staying power.

For that reason, Grandbridge can qualify borrowers and their real estate for a loan that will perform in accordance with investor expectations of benefits over the investment holding term. Every application is thoroughly scrutinized by the Southwest Florida office’s expert underwriting staff (see box), which is accustomed to recognizing quality real estate transactions.

“The professionals on our staff are extremely talented. Not only are they great with people, they understand the property and investment analytics, and can (facilitate a deal),” says Rocco. “Individually and collectively, they offer the highest level of customer service to the borrowers, investors and brokerage community.” More often than not, superior service results in repeat business for Grandbridge, usually from customers with multiple loans.

“Commercial real estate fundamentals remain solid and we have plenty of capital, which gives us incentive and opportunity to remain very active,” says Rocco. “At the same time, we’re fortunate to have lots of active borrowers who want to lock in a low rate and redeploy their capital somewhere else.”

The Advantages

According to Rocco, being a major, national player enables Grandbridge to offer local individuals and small investment groups the types of products and services typically reserved for high-profile clients, such as REITS and institutions. Attractive terms and fixed rates further sweeten the deal for small investors, who typically pay more when they borrow from a traditional lender, such as a bank. That’s because most banks specialize in short-term, floating-rate, recourse loans on commercial properties.

Non-recourse  loans from Grandbridge feature favorable interest rates that can be fixed on a long-term basis, currently in the 5.50% - 6.75% range. What’s more, loan terms and amortization schedules are flexible and can be tailored to borrowers’ specific needs. While the average term is 10 years fixed, clients may obtain loans for periods ranging from 5 to 20 years or longer.

Offering loans from $750,000 to upwards of $20 million for individual investors, Grandbridge also has the ability to provide large structured finance transactions to institutional and public real estate investors, as well as developers.

These and other differences make Grandbridge an attractive financing alternative for commercial real estate owners, investors and developers, rather than a source of competition for traditional lenders. In fact, some of its best customers are banks.

“We can offer their customers a product that they can’t Ñ long-term, fixed-rate, non-recourse commercial mortgages,” Rocco says. “We don’t want their checking or savings accounts. They keep the banking relationship; we merely supplement what they do.”

Besides freeing up a borrower’s capital for other investments, Grandbridge offers clients benefits that few can match. Among them:

¥     Fast Loan Approval. Most competing lenders in and around the state must call out of town to make commercial loans to local investors. That’s not the case at Grandbridge, which has offices nationwide, including 5 in Florida. “If we can’t finance a deal, we’d rather give a quick no than a long yes,” says Rocco.

¥     Product Variety. As a national platform lender, Grandbridge originates loans through the nearly 100 correspondent lenders it represents. Further, because it is a non-recourse lender and investment bank, Grandbridge doesn’t face some of the government restrictions and regulatory hurdles imposed on traditional commercial banks.

¥     Local Expertise. The company serves commercial clients nationwide through a network of 27 regional offices. In Florida, Grandbridge maintains offices in Orlando, Tampa, Ft. Lauderdale and Jacksonville, as well as Bonita Springs. The company’s extensive reach is a boon to investors who own out-of-state properties or regional portfolios of properties.

¥     Market Awareness. Being the only full-service commercial real estate investment banker with a local presence gives Grandbridge the perspective needed to understand the dynamics of that particular market. That awareness allows Grandbridge to adapt quickly to market shifts in a changing environment.

Financing for the Future

Qualified borrowers, superior properties and solid underwriting practices have insulated Grandbridge from the problems currently plaguing some parts of the nation’s commercial marketplace.

“We’re fortunate in that there’s still strong demand for our product and that our sources of capital from the institutional marketplace are very liquid,” says Rocco. He adds that despite current uncertainty in the market, Grandbridge remains bullish on the long-range outlook for investment opportunities in Southwest Florida.

“In many cases, commercial property prices have stabilized or dropped to a level that is very attractive to investors,” many of whom didn’t participate in the recent boom. “So while market conditions are less than ideal at the moment, this is clearly going to be a very positive long-term environment for commercial real estate investors. And we’re long-term lenders and we’re committed to Southwest Florida.”   

The Professional Lending Team
at Grandbridge Real Estate Capital

¥     Ashley Jordan (Real Estate Analyst). Jordan handles loan underwriting, income and expense analysis, and research for all types of commercial properties.

¥     Shirliene Navarro
(Real Estate Analyst & Administration). Besides handling loan packaging, property research and due diligence, Navarro is a first point of contact for property due diligence, market research, and loan processing and packaging.

¥     Dan Neal (Real Estate Analyst & Deal Manager).
In transferring from Grandbridge’s Indianapolis office, Neal brings to Southwest Florida an extensive analytical background in commercial
real estate. He heads the area office’s loan underwriting, sizing and deal structuring efforts.

¥     John Nicola
(Vice President). Nicola handles loan originations for all commercial asset classes
on behalf of local and regional owners, developers and investors.  

¥     Ed Tamer (Vice President). With his extensive experience as a real estate investment banker, Tamer originates loans for clients nationwide, including local, national and regional developers, as well as institutional investors.

¥     Matt Rocco (Sr. Vice President). Rocco is the regional manager responsible for loan production, servicing and origination programs.

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