Felix Gutnikov: “Some of the newer platforms, coming into the market, are underwriting very aggressively because they want to quickly gain market share.”
LOS ANGELES—Thorofare Capital has originated $54 million in bridge financing through its Thorofare Asset Based Lending Fund IV. The fund launched at the end of October 2015, and is already ahead of schedule. According to Felix Gutnikov, EVP of origination at Thorofare Capital, the fund is excepted to hit $300 million, and with leverage, will have $450 million of buying power.
“We are definitely ahead of schedule. In the predecessor fund, we did half of this amount right out of the gate, so this is a very strong start,” Gutnikov tells GlobeSt.com. “We have some momentum because we were actively deploying capital in the third fund and the tail end of the Q4 2015 pipeline trickled into fund four. We think the pipeline will remain pretty full and we should be hitting out volume goal. We aren't going to overdo it.”
Although the fund has seen rapid success, Gutnikov says that there isn't an increased appetite for bridge lending, and if anything, there is more competition. “We are benefitting from having relationships with brokers and borrowers that come back to us with repeat business. Even though there are new entrants into the bridge loan space, people have come back to us. We are really benefitting from referrals from satisfied clients, and we are reaping the culmination of our hard work over the past five years.”
Although the fund is doing well, Gutnikov is still concerned about the increased competition. The entrance of new lenders into the space has been a challenge for the firm. “We definitely see it as a challenge. Some of the newer platforms, coming into the market, are underwriting very aggressively because they want to quickly gain market share,” he adds. “We are trying to stick to fundamentals and underwrite creatively yet prudently, and that is harder to do when there is hot money coming in.”
In addition to leveraging professional relationships, Thorofare Capital is focusing on regional investors to place their capital. “Our strategy is focused on smaller markets that are less efficient, and where we can get our yield. We do business with good sponsors, mostly regional middle-market sponsors that invest within their specific areas of the country on value-add deals, so there is usually a turn-around component,” says Gutnikov. “The properties that we are financing are purchased as underperforming or not performing at their maximum potential, then repositioned through renovation, lease-up of vacancy, and an increase profitability through better management.” The loans range from $5 million to $30 million.
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Kelsi Maree Borland
