FEBRUARY 23, 2017 | BY KELSI MAREE BORLAND
LOS ANGELES—The firm launches Archway Fund, a private bridge lender that will focus on first trust deed loans for borrowers that cannot secured funding through traditional lending sources.
LOS ANGELES—Partners Capital in a joint venture with an unnamed $700 million investment management company has launched Archway Fund, a private bridge lender with flexible capital to provide first trust deed loans. Archway will provide first trust deeds with 75% LTV for opportunistic deals valued from $2 million to $5 million, and will specifically focus on borrowers that are unable to secure funding through conventional sources because of tight closing deadlines or high risk. To find out more about the new lender, we sat down with Bobby Khorshidi, President of Partners Capital for an exclusive interview.
GlobeSt.com: What was the impetus for launching the fund?
Bobby Khorshidi: Heightened scrutiny of traditional mortgage lenders is creating a lending environment full of red tape and bureaucracy. In today’s lending atmosphere having sufficient equity in a transaction is no longer good enough for traditional lenders. For many Real Estate sponsors the time and amount of paperwork it takes to get a loan closed is not worth the interest rate savings they would get through a traditional lender. Especially when these sponsors are looking for a shorter term bridge financing. The rise in competition between private money bridge lenders has significantly lowered the interest rate spread between traditional and private money sources. It’s a time value issue and sponsors are opting to pay the freight to be able to scale and operate more efficiently
GlobeSt.com: Why was this a good partnership for this venture?
Khorshidi: We are philosophically aligned with our partner. The relationship has grown over time to where we have been able to exercise more autonomy in underwriting and execution. We spend a tremendous amount of time upfront getting to understand the transaction and our sponsor’s business plan. We want to know the good and the bad. This helps us with delivering better service to our borrowers and better timing our closings with our investors.
GlobeSt.com: Why are you focusing on trust deed loans?
Khorshidi: Trust Deeds present excellent risk adjusted returns and are backed by an investment class that has fared relatively well through the cycles. The company principals have a tremendous amount of success both as former bankers and also as successful Real Estate Investors. We are not bureaucrats, we know what is important to our Sponsors and try to be practical in our approach.
GlobeSt.com: Is there a large demand from borrowers that cannot secure conventional capital?
Khorshidi: Private Money lending has over time become less about providing financing to those who cannot secure capital and more about financing borrowers who prefer the speed and efficiency and ease that money can be borrowed. Who wouldn’t want to sit across the desk from the person that has the 1st and last say about approving their loan? Off course you a premium to private moneylenders when you get that, but for many it’s a small price to pay when you have to close a deal in 2 weeks. You don’t get that personalized service if you are going through a crowdfunding platform, and you don’t get that at a bank unless you are repeat high value client.