(Bloomberg)—Alternative credit investment firm Blueprint Capital Advisors and real estate platform T30 Capital LLC have struck a deal to scale up their commercial real estate lending platform as the US housing shortage and rising rates suffocate property buyers.
The firms plan to grow their loan pipeline from $750 million to $2.5 billion over the next five years, by providing $5-50 million senior bridge and construction loans for commercial real estate properties along the Northeast corridor, they said in a June 21 statement. The companies will focus on borrowers which have traditionally been underbanked, namely minority- and women-owned enterprises.
The partnership comes at a time when home prices across the US are skyrocketing as rates go up and housing supply stays stagnant. New US home construction dropped in May, with applications to build -- a proxy for future construction -- falling to an annualized 1.7 million units, the lowest since September. Blueprint and T30 aim to help bridge this gap in the middle-market for minority- and women-owned businesses, where “traditional lenders are not interested,” said Jacob Walthour Jr., Blueprint’s CEO, in a phone interview.
The CRE loans will go toward property types ranging from multi-family and mixed-use to hotel and industrial, with tenors of between 12-24 months that can go up to 36 months if the deal requires it. The firms expect the loan-to-value ratio to remain between 70-75%, said Walthour.
“We expect that the net result of our combined efforts will be access to a significant volume of niche and differentiated deal flow that delivers attractive yield and solid downside protection,” said Margaret Grossman, managing partner and president of T30, in the statement.
While some companies securitize their CRE debt -- bundling the loans together and selling them as bonds known as CRE collateralized loan obligations -- Blueprint and T30 plan to hold off on that process for now.
“We would be open to scaling up in the future and doing it. But, given the volatility, if you securitize your hands are tied to what the markets wants,” said Grossman in a phone interview. “This gives us more flexibility.”
Founded in 2015, Blueprint is a $1.4 billion investment management firm focusing on alternative credit opportunities. Meanwhile, real estate investment company T30 has deployed $1.5 billion of capital through more than 250 real estate deals across debt and equity, according to the statement.
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