Meridian Capital Group, America’s most active dealmaker, arranged three $75 million revolving lines of credit totaling $225 million for three large national debt funds. Each credit facility begins with $75 million of capacity that can be increased as required. The facilities have no mark-to-market or re-balance requirements, and advances are funded within one to three days of request. These transactions were negotiated by Seth Grossman and Jason Kahn of Meridian’s West Coast team. Jackie Tran and Sarah Kuebler assisted in the closings.
Two of the debt funds are headquartered in New York and the third in Los Angeles. All three funds have multiple offices and all close loans nationally. One of the lenders has historically focused on traditional middle-market value-add and bridge financing. Another typically lends on the same, as well as on heavier re-positioning, adaptive reuse, and select construction, mezzanine, and preferred equity financing. The third lender focused pre-pandemic exclusively on hospitality construction and has since expanded its parameters to include multifamily construction.
“Our engagement to source a credit facility for the construction lender commenced in the fourth quarter of 2019. At that time, we completed a roadshow with our client and sat face to face with providers large and small. Despite early success, that process was ultimately put on pause as nearly all lenders pulled away from hospitality construction after the onset of the pandemic, and very few facility providers were offering compelling terms to new clients. Nonetheless, we never stopped communicating with the capital sources that provide these facilities, as well as other financing products such as note-on-note and A-note solutions. As the market began to improve in the early fall, we were able to procure terms for a construction facility from a different provider than we initially signed up the facility with pre-COVID. We have now closed with more compelling terms than were available prior to the pandemic,” said Mr. Kahn.
“Given Meridian’s deep understanding of the commercial real estate capital markets, and a situation whereby these debt funds that have become clients are also valued lenders that Meridian works with frequently, we were able to advise and add value in the process when these funds determined that it would be prudent to have such flexible capital in place to supplement their other facilities,” said Mr. Grossman. “Nearly all money center and investment banks that traditionally provided this capital pulled back significantly in 2020 with regards to stopping advances, initiating margin calls, or worse. Our goal is to help our lenders; we are proud to add value in this unique way for our lending partners and to continue to identify and assist in providing liquidity to the market through transactions like this,” he added. “As a market leader, we remain actively engaged on several similar assignments for debt funds and REITs, in addition to placing A-notes, senior mortgages, and working on note sales, as the market continues to adjust to new operating standards.”