Press Release
Transaction of the Year Award
The Excellence Awards 2010 presented by MHN (Multi-Housing News)
NEW YORK, NY - October 2010 - Mortgage Equicap, a boutique commercial mortgage brokerage firm and advisor led by Daniel Hilpert, has closed in excess of $200 million of construction financing since the beginning of the credit crisis.
At the beginning of 2009, a prominent developer engaged the firm to arrange construction financing for a boutique condominium development in the heart of the Upper East Side in New York. The loan request was approximately $16 million.
The immediate challenge in this transaction was to convince a lender that there was a market for large condominium units and that the loan amount should not be based on the project's rental fallback. The loan submission was initially turned down by most lending sources, but the firm eventually succeeded in convincing two local banks to provide the requested financing. The loan had to be structured as participation because each lender's lending limit was lower than the requested loan amount.
As the credit markets continued to deteriorate, both lenders grew increasingly concerned about the risk of participating with another lending institution. If one of the lenders were to be shut down by the FDIC, the developer would not be able to use the entire loan facility and complete the project. Despite several attempts to convince the credit officer, one of the lenders eventually decided to take a pass due to counterparty risk.
Mortgage Equicap had to then convince a third lender to commit to the party. The new lender's lending limit was higher than previous lenders' individual lending limits, but not sufficient to provide the developer with the requested leverage. Because the new, third lender couldn't provide the entire loan amount due to the institution's lending limit, Mortgage Equicap had to arrange preferred equity on top of the first mortgage loan. After obtaining credit approval from both funding sources, the firm had to negotiate loan documents, the operating agreement and the inter-creditor agreement between the two capital providers.
Judges' Comments: "[Daniel Hilpert's] obvious excitement about his accomplishments comes through very clearly."
