Why Flexibility In Bridge Financing Is Key
Hunt Mortgage Group managing director Michael Becktel tells Bisnow that flexibility in structure is the key to success in multifamily lending. Given the firm's 2016 stat line, we're inclined to agree.
Hunt had its best first half yet, notching $125M in bridge financing through the first six months of the year to go along with over $1.2B in total lending.
"We're willing to be extraordinarily flexible on multifamily deals where we offer little to no prepayment," Michael says.
"A lot of our competitors need 18- to 24-month time periods for spread maintenance. We'll do three to six months."
Both the flexibility and the strong returns on 2016's opening quarters stem from one of Hunt's core business strategies. Bridge loans are not just a carrot used to hook clients for a single transaction. They're a retention tool.
"We're not making a bridge loan for the sake of making a bridge loan," Michael says. "We're looking to add that client to our portfolio long term. These loans drive our permanent business. We make that loan because we want to fortify a relationship with that client."
Michael says this year's strong numbers are the return on the investment made in 2013 when Hunt acquired his original firm, Centerline Capital Group.
The benefits Michael and his team were able to offer borrowers then—thanks to the infusion of capital—has translated to repeat business now.
"What we're really seeing now is the first waves of loans that we did early on in the program converting to permanent business," he tells us. "This is helping drive record volume in our agency business, which will see its best year in the company's 44-year history."
"We have 20 offices around the country and 66 people on our origination staff, so we have lots of boots on the ground and strong relationships. We're willing to take risks on borrowers that we know and like and have been doing business with for literally decades."
As soon as 2017, Michael projects Hunt will be completing two or three times more bridge loan transactions than the group currently is. The optimism is thanks in part to a recent decision to open up the financing plans to all property types.
"I think the market is well-positioned for lenders like Hunt who have a flexible capital base. There's a degree of uncertainty in the markets, but uncertainty really breeds opportunity."
While he projects significant growth on the horizon, Michael says that Hunt's size and middle-market focus is ideal and he doesn't project the firm looking to outgrow its target market. "We're not a huge institution where it's difficult to make changes to your lending platform," he tells us.
"That's the key in the bridge game."
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