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Deal Making

A guide to speed

Certainty of execution matters in the transaction business. When a long-term client approached Equicap with the acquisition of a 19-unit apartment building in the Paulus Hook section of Jersey City, the team acted quickly. The client’s 1031 exchange was up against a deadline and with only 4 days remaining, Equicap went to work right away.

The real estate business is based on human capital — long-term relationships fostered over many years and developing trust with financial institutions and clients. Transparency is critical to close a deal in less than a week. Commercial real estate transactions are driven by information asymmetry — last minute surprises kill deals. An experienced team knows how to conduct due diligence and tackle potential issues early on.

Another critical component, finding a lender who has a flat hierarchy and where decision making is concentrated in the fewest hands. It helps if a lender doesn’t need to sell an A-note to leverage its position or raise the money in a syndication and find a co-lender to participate in the deal. Discretionary capital is key to speed.

The borrower stated, “Equicap was not only able to go seemingly effortlessly through the due diligence checklist, but also negotiated favorable terms.” When speed is important, borrowers often have to make sacrifices on rate and terms. Equicap negotiated a loan that is prepayable at any time without any exit fees and minimum interest allowing the client to execute on his business plan — renovate units, bring rents to market and refinance with a permanent loan. All within less than a week’s time.

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