New Ways to
Charles Everhardt of Lockwood Property Holdings uses bridge financing to keep operations flowing, although e doesn’t call the product by that name. Lockwood typically has multiple projects going at
one time as it seeks out development opportunities for a group of
sophisticated investors. When it spots a deal that might work, it
puts the property under contract.
At this point in the process Lockwood would be expected to put
up soft or earnest money, which could
be, depending on the project, millions
That is quite a dip into its capital
reserves, Everhardt says. “We’d rather use our own capital for
due diligence or corporate overhead rather than tie it up for
big earnest money deposits,” he says.
So it turns to a new startup called Winchester Equities, based in
New York City, which fronts the company the money for the
deposit. Everhardt doesn’t consider it bridge finance in the tradi-
tional sense in that there isn’t collateral in play and the company
uses the money for a far shorter term than normal bridge loans.
Winchester Equities’ financial product is, though, short-term
money that addresses a gap in the traditional lending markets—
and that is indeed bridge financing, at least circa 2014.
In short, bridge financing is expanding beyond its traditional
definition of short-term money provided for such uses as paying
off a loan or to adding value to a project.
It is being used, as Lockwood illustrated, to front deposit
money for an acquisition. It is also being used to pay off highly
leveraged and maturing CMBS loans—scenarios in which oftentimes the bridge providers are about the only source available,
says Ann Hambly, founder and CEO of the Dallas-based 1st
By Erika Morphy
LOANS FOR SHORT-TERM MONEY
HAVE BEEN A STAPLE IN THE
COMMERCIAL REAL ESTATE CAPITAL
STACK, BUT OH HOW THEY HAVE