ENGLEWOOD CLIFFS, NJ-After less than 12 months back in the lending business, Procida Funding’s “100 Mile Fund” has provided more than $21 million in rescue loans on $30 million in debt – and that’s just the beginning, says William Procida, the fund’s founder and chief investor.
Among the projects benefiting from the 100 Mile Fund last year were: The Gulls Cove Condominiums in Jersey City; Freehold Commons, a newly built office building in Freehold, NJ; a commercial building at 3038 Atlantic Ave. in Brooklyn, and a half-built (now complete) apartment building on Park Avenue in Union City. It also provided one loan-on-loan for the half-built Ocean Breeze Condominiums in Belle Harbor, Queens.
“I expected to do more,” Procida tells GlobeSt.com. “But this is no time to go hog wild.”
Procida had sold a lending company in 2007, and because of a non-compete agreement could not return to the market until spring of last year. Unlike other investors, however, the 100 Mile Fund does not just acquire debt or buy an asset. Instead, it buys a borrower’s debt from the bank, passes the discount through to the borrower, and then provides capital and expertise to complete the project so it can be sold or refinanced. All projects must be within 100 miles of Procida Funding’s headquarters, hence the name.
“In a flat market, you have to have two things: circumstance and hard work,” Procida says. “The circumstance is that the bank wants to get out of the loan. The borrower should be the high bid. Our thinking is that if you do what you say you’re going to do, you get the discount, and we get the yield.”
If the bank agrees to the right purchasing price, and the borrower agrees to the right process to complete the project, Procida uses its expertise as a developer and contractor to assist, offering advice not always available to small and mid-sized companies, William Procida says.
Procida actually could just buy the debt and/or the project itself, but opts to rescue other developers instead because “I’m too old, and it’s bad karma,” he says. “I’m trying to take the high road and see if I can help people, rather than take advantage of people.”
The opportunities thus far have come through referrals, but they haven’t been easy. Procida notes that 200 opportunities resulted in 10 closed deals. Even so, Procida hopes to do $100 million through the Fund and in participation with Fidelity and Guarantee Life Insurance.
“I’d rather be small and do well for my investors and do good for my borrowers,” Procida says. “The opportunity cycle hasn’t even begun.”
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