When Banks Say ‘No,’ Innovative Private Lenders Bring Projects To Life
In 1997, the Canadian economy was in a rut. The country was still recovering from the large budget deficits and public debt it had accumulated in the early 1990s and, as a result, developers were struggling to find regulated lenders willing to finance their projects.
But where others saw risk, Trez Capital saw opportunity.
“Our founder, Morley Greene, started Trez Capital 22 years ago to help qualified developers facing a tough market get projects underway when banks said ‘no,’” Trez Capital President Greg Vorwaller said. “Today, we have more than $3.5B in assets under management, all from providing the type of innovative financing others couldn’t.”
Trez Capital specializes in offering debt financing solutions for unique projects across both Canada and the U.S., funding everything from a $7M multifamily redevelopment in Ontario to the construction of an $85M residential rental high-rise in Florida. Bisnow sat down with Vorwaller to learn more about the types of projects the company sees potential in and why he believes that debt financing is the best way to help ambitious developers achieve their goals.
Bisnow: Who do you believe benefits most from debt financing?
Vorwaller: Debt financing, compared to equity, is great for developers who have their sights set on multiple projects. The more money they can borrow for one venture, the more equity they will have left over to invest in other projects.
This is especially true if they work with private lenders like Trez Capital, who will provide financing higher up the capital stack, at levels that are greater than what they could customarily get from more traditional regulated lenders like banks or insurance companies.
Trez Capital and our investors also benefit from having a secure debt position that delivers a stable, above-average return, all while minimizing risk.
Bisnow: What types of projects are best suited for debt financing?
Vorwaller: We typically work with borrowers who are looking for flexibility and a quick turnaround. The projects we look at are often ones that may be suitable for repositioning — these are buildings that are undervalued in the market and the developer is hoping to invest some capital to make improvements to the property and then re-release it and rent it out at current market rates.
We also do construction financing on for-sale and for-rent multifamily, lot development financing and the development of mixed-use projects, all in growing markets.
Bisnow: What do you look for in a project?
Vorwaller: We have specific criteria we follow that starts with growth. We want our projects to be located in areas where the GDP is growing at above-national levels, along with job opportunities and the population rate, so there will likely be a high demand for the projects we finance.
Next, we look at affordability. We only want projects where the end product is affordable in the market, whether it’s on the sale side or rental side. Finally, we examine the quality and experience of the borrower to determine how strong they are financially and their ability to deliver the expected results for us and our investors.
Bisnow: What sets Trez Financing apart from other lending firms?
Vorwaller: We are consistent, nimble and transparent. We take great pride in our underwriting and due diligence. We have separated our underwriting from our origination to create a truly rigorous process designed to validate the investment thesis and ensure that the projects we finance meet our criteria. This allows us to close on our deals with confidence that with proper controls and monitoring, the financing is structured in a way that will deliver attractive, reliable current returns and capital.
It helps that we maintain a consistent strategy and have boots on the ground — our originators spend a lot of time in each market we cover to make sure it’s the right fit for us and can deliver a high level of return for our investors.
We take great pride in what we do. The first borrower we ever worked with remains a client today, and we plan to continue to consistently deliver excellent service as we grow.
This feature was produced in collaboration between Bisnow Branded Content and Trez Capital. Bisnow news staff was not involved in the production of this content.