SAN FRANCISCO--(BUSINESS WIRE)--RealtyShares, a leading online marketplace for commercial real estate investing, today announced a gap financing program that delivers subordinated financing solutions to commercial real estate owners seeking higher leverage on the financing of projects under $20 million. The suite of solutions, which includes preferred equity, mezzanine debt, and second lien loans, helps commercial real estate operators get the capital they need to buy, refinance, or renovate commercial properties.
“Gap financing offers distinct advantages for both sponsors and investors on the RealtyShares platform,” said Ed Forst, CEO of RealtyShares. “Sponsors receive the higher leverage financing they need to fill out their capital stack, and investors have the ability to invest in fully-underwritten, secured, high-yield, higher-risk opportunities.”
Gap financing addresses a need in today’s financing market. Currently, institutional lenders gravitate towards higher-value transactions, leaving few options for sponsors in the middle market sector, defined as transactions under $50 million. Additionally, at the late stage of the real estate cycle, a significant amount of sponsor capital is locked up in existing projects. Therefore, sponsors are struggling to get the stretch capital they need, especially for projects smaller than $20 million, where financing can be even harder to find.
With the launch of its gap financing program, RealtyShares will provide second lien debt for projects that may already have senior financing identified, assuming that mutually acceptable terms can be reached between the two firms. For the sponsor, this can mean higher leverage (up to 85% loan-to-cost) and a faster close.
“Since its founding, RealtyShares has provided gap financing for 178 projects and raised more than $205 million in capital. The firm functions as a one-stop shop for sponsors, helping them identify the capital structure that best suits the needs of their project,” said Bill Lanting, VP of Commercial Debt.
This program in no way affects RealtyShares’ stringent underwriting standards. Each project is subjected to a rigorous scrutiny that involves sponsor evaluation, asset evaluation, risk analysis, transaction negotiation, and compliance.
RealtyShares is transforming the real estate investment landscape by connecting project sponsors to debt and equity capital from accredited and institutional investors. To date, the company has invested more than $730 million across 1100 real estate deals.
Private investments are highly illiquid and risky and are not suitable for all investors. Through the RealtyShares website, these investors can browse investment opportunities, perform due diligence, invest online and gain 24/7 access to an investor dashboard to watch how their investments are performing. RealtyShares offers securities through North Capital Private Securities Corporation, member FINRA/SIPC. For more information on how to become a real estate investor or to seek capital through the RealtyShares marketplace, please visit www.realtyshares.com.