Darren Esser, Head of U.S. Capital Markets and Managing Director at Trez Capital (Courtesy Trez Capital)

Trez Capital offers unique debt financing solutions for real estate projects across Canada and the U.S. Since 1997, Trez Capital has paved the way for developers and investors to continue to succeed, and despite the uncertainties of the pandemic, is adding to its roster of flexible options to support borrowers.

“Bridge lending is booming because of the pandemic,” said Darren Esser, Head of U.S. Capital Markets and Managing Director at Trez Capital. “We see this as an opportunity to give sponsors the flexibility they need to carry their projects through to the other side of this uncertain economic time.”

Esser says that the pandemic has amplified the need for nimble options for owners and operators of commercial real estate. Large and small corporations began moving headquarters to more tax-efficient and business growth friendly locations pre-pandemic. Similarly, to trends seen in Canada, across the U.S. the pandemic accelerated movement out of densely populated cities to suburban and rural living.

Remote work became a necessity during the pandemic and there is now an expectation that employers will continue with flexible work-from-home abilities post-pandemic. This has freed employees to move away from densely populated urban markets and traditional downtown office locations. An important trend to note includes population migration to the Sunbelt from traditional Northeastern and Midwestern cities. As a result, there is a higher rate of job creation and need for multi-family housing and updated space for industrial and office properties. As sponsors take on projects to fill these needs, short-term bridge loans will provide the needed flexibility to complete improvements, upgrade older projects, add tenants, increase rents, and burn off concessions to get the assets to perform at their maximum potential. The sponsor can then refinance the bridge loan with permanent fixed rate financing enabling them to either realize maximum proceeds or sell the asset to obtain max sales proceeds.

“The bridge lending market has always been a robust market, regardless of the pandemic. But the past year has created more opportunities because it has impacted property performance, and that sponsors who own commercial real estate assets want time to bridge to the other side of the pandemic. The volume of opportunities is greater now, but assets are constantly evolving, so we see bridge lending as a product that meets an existing and growing need,” said Esser.

Trez Capital is a dynamic and experienced lender with tremendous expertise in pre-development land, lot development, construction and bridge financing. Adding a competitive floating rate, non-recourse bridge loan product in the U.S. allows Trez Capital to finance projects starting with the land and taking the sponsor through construction and lease-up (cradle to adulthood).

The advantages for the borrower are clear: short term, lower cost financing to get their projects across the finish line. Like all its lending products, Trez Capital takes a rigorous risk-managed approach in underwriting bridge loans, with a focus on multi-family, industrial, and office collateral in regions with strong population and GDP growth. Opportunities include providing lower cost bridge financing to construction borrowers once the project is substantially complete to cover the time to lease up and stabilize the asset, along with providing financing to sponsors on value-add (light to heavy lift) projects.

Trez Capital typically offers loans between $5 and $50 million in size, and may go up to $100 million in certain circumstances, with floating rates and within markets that meet the company’s specific set of growth criteria. Central to the company’s criteria for selecting a lending or investment opportunity is to focus on markets with higher-than-average job growth. The pandemic has renewed the organization’s confidence in the markets it operates in, while opening the door to new areas of opportunity.

As companies and the population migrate to cities and suburban areas in the Sunbelt like Phoenix, Las Vegas, Dallas, Houston, Atlanta, Charlotte, Orlando, and West Palm Beach and out of gateway markets like San Francisco, Los Angeles, Chicago and New York, communities will need to be built. Trez Capital also looks at the human angle of these trends.

“At Trez Capital we are passionate about financing projects that build the future for individuals, institutions and businesses while supporting dedicated professionals and growing communities across North America” said Esser.

Over the next year, Trez Capital’s bridge loan business is targeting $1 billion in origination volume.

“Historically, Trez Capital’s construction loan would be refinanced by a third-party bridge lender because Trez Capital wasn’t offering a competitive product, but now we can compete and win bridge loan opportunities which will help augment our construction pipeline,” said Esser. “We can provide the one-stop-shop experience that gives sponsors options and peace of mind.”