HOWELL, NJ-GlobeSt.com has exclusively learned that Eastern Union Funding is forming a structured finance division to be headed by Shaya Ackerman, who has been one of the company's top producers.
Ackerman will work with Dov Zabrowsky, who will serve as the senior analyst in the new division. Zabrowsky said the division will handle the more complicated projects “constantly popping up at Eastern Union.”
“In today's market there are many transitional properties that are targeted by investors because of potential for higher returns,” he said. “The opportunities are complex and require structure and expertise to resolve financial requirements that can mean the difference between a successful venture or a bust.”
Here is an example of an unconventional situation requiring structured finance, offered by Zabrowsky: “A client bought a 50% vacant office building in a major downtown market, where the typical vacancy rate was roughly 25%. Filling the space as it was looked unlikely, but the market had recently experienced a major upsurge in residential demand, so the client changed his game plan, converting the office into multi-family units.”
In that case, Eastern Union structured a 24-month construction loan with mezzanine debt bringing the loan-to-value up to 80%, and secured the funding sources.
Ackerman has already handled a number of structured-finance deals with Eastern Union. He recently closed on a $49.7 million financing for a five-building portfolio. The deal involved complex debt allocation, with multiple borrowers in a three-member partnership.
Another transaction involved a $20 million cash-out to a borrower, plus a hold-back structure pending 421a tax abatement and an earn-out payment. In a hold-back arrangement, the lender commits to a loan but holds back a certain amount of the proceeds until more value is added to a property. Earn-out means a larger loan is granted, contingent on the property increasing its revenue according to an agreed-upon plan.
“The new department would not be possible were it not for Eastern's banking relationships,” aded the company's president, Ira Zlotowitz. The company deals regularly with over 50 banks, he said, and is a top-three producer at 18 of those banks.
Eastern Union is now doing 400 deals a month, Zlotowitz said. It recently added a small loan department to orchestrate transactions at the other end of the spectrum from the structured finance division.
“Most firms avoid doing tougher deals," Ackerman said. "At Eastern we not only continue to service our client base and their ongoing deal needs, we are concurrently expanding our core staff to be able to support more complex structured deals of all sizes.”
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