Lee Kotler Kicks Off Konnect Real Estate With A Large, Creative Debt Placement
Commercial real estate pros dream of starting their own firms constantly. But few actually take the chance and fewer still launch a firm with a creative mid-eight-figure deal, like Konnect Real Estate founder and president Lee Kotler. Right off the bat, he filled a gap left by banks.
Kotler launched Konnect in January after over a decade wearing various hats at Sperry Van Ness Crossroads Property Management and Crossroads Development Partners. Rather than focus on one particular skill, Kotler wanted to create a platform where he could utilize multiple strengths.
“My philosophy with Konnect is more of a consultative approach,” Kotler said. “I want to use my experience to provide custom solutions to problems smaller investors face in today’s market.”
His first two deals warmed up his debt placement skills.
Kotler said his first deal with Konnect reflects that. He refinanced the loans on two hotels in Laguna Beach, Calif., while simultaneously using that refinancing as new debt placement for the acquisition of a 304-unit apartment complex in Moreno Valley, Calif. The total transaction volume for the three-property portfolio: $61M.
Kotler said he met his client while networking last fall. The client was passively acquiring real estate assets and was transitioning a larger portion of his business into real estate ownership and development. But the client needed a hand with his capital structure, specifically the allocation of debt and equity in his portfolio. Kotler reviewed the portfolio, determined the hotels would serve as leverage to acquire the apartments, and placed the loan with the Chicago office of LoanCore Capital Management.
Kotler said most banks would not underwrite a loan because the deal was too big and complex but what made the portfolio an attractive transaction was its location and that these were stabilized assets.
As another example of that, Kotler closed his second deal, a $3M bridge loan, with his own private team of investors to refinance an office building in Des Moines, Iowa. Kotler said the owner, a private investor, needed flexible funds quickly for a refinancing. If there is a specialty Kotler wants to focus on moving forward, it is working on debt placement. He said there is an endless need for capital whether it is short-term bridge loans or long-term permanent debt working with institutional partners.
“There will always be a need for alternative lending solutions,” Kotler said.