Globe Street Exclusive: How This Firm Finds Debt/Equity Fit

NEWPORT BEACH, CA—Each group of providers has a different “box” in which they like to play, so matching the right deal with the right provider is a challenge, Landmark Capital Advisors’ new director of  business development Tom Farrell tells exclusively. We spoke with Farrell about his new role at the firm, the challenges of dealing with debt and equity providers and opportunities for further growth in this space. What attracted you to Landmark Capital Advisors?

 Farrell:  I worked at Bank of America for many years in the commercial real estate group, eventually becoming the division executive running the home-builder division nationally. I left BofA in late 2011 to start a home-builder finance program at Sabal Financial Group,a non-regulated lender, featuring non-recourse AD&C loans. In September of last year, I moved to Bellstone Capital Advisors, whose principal is Robert Price. Bellstone specializes in raising debt and equity for real estate developers and homebuilders.  I quickly learned the capital markets landscape for raising debt and equity as a financial intermediary.  I know several people at Land Advisors, including the initial founders of their capital-markets group, Landmark Capital Advisors. I reached out to them to see if there was an interest in forming a mutual working relationship. It was apparent to me that there was an excellent fit between what the Land Advisors Organization brings to the table and my background. It is an attractive move for me because we have a well-respected brand, a national reach and are the largest land broker in the country. We have also recently started an advisory and research group called Market InSite Real Estate Advisors, which ties well into what we do on the capital-markets side. We have boots on the ground via land brokers in all the major housing markets in the country. Land Advisors has arguably the best market data on land, which is invaluable in determining the viability of a real estate transaction.  These unique resources will enable us to help our clients put their best foot forward. What are your goals in your new position with the firm?

 Farrell: Landmark Capital Advisors was started a couple years ago and has developed a good business. I’m here to help take it to an even higher level. I have extensive contacts from running national platforms for a number of years. Our focus has been on the Western U.S.; however, we will look at deals throughout the country including income properties. We have individuals on board to source debt and equity for all asset classes, including for-sale housingapartments,office, industrialhotels and retail. What are the greatest challenges to dealing with debt and equity providers today?

 Farrell: Each equity provider has a box in which they like to play. The more institutional ones like Oaktree or Mountain Capital tend to look at the larger deals, and they have specific geographies and product types they prefer. As you move down to a middle-market capital provider such as Strand Capital or Borstein Enterprises, they have their own unique niches they like to invest in. Lastly, there is the “friends-and-family” category, which, in many cases, has its own nuances in its investment criteria.  So there’s a different angle for each, and we try to hone in on which projects they like to see, which metrics they look at, and put deals in front of them we feel would be the best fit.

On the debt side, similar to equity, each bank or private lender seems to have their unique comfort zone. We try to match our client’s needs with the debt provider’s focus to insure a greater success rate. We try to save our client’s time and effort by not just shot gunning a project out to many providers who might not have an interest. Narrowing it down to two or three is more efficient and productive for all. What opportunities exist in this space for further growth?

 Farrell: There is an abundance of capital that has been raised in the market today.  The providers and their programs are constantly evolving. In general, both the income property and for-sale real estate markets are healthy. I am cautiously optimistic that the improving economy and low-interest-rate environment will support continued improvement in the market in 2015. With the large amount of capital out there, underwriting standards are loosening a little, and capital is becoming more aggressive. Hopefully capital will remain disciplined, which will benefit us all in the long run.

As noted, capital markets is an ever-changing world. It is important to have a company such as Landmark Capital Advisors, which can help you navigate the perilous waters. Many builders and developers reduced their staff during the downturn and are reluctant to add overhead. Landmark, with its extensive array of debt and equity providers, can serve effectively as the substitute for the in-house VP finance the builder may no longer have. We understand the requirements of the capital providers, can provide insight into the market with our proprietary market information and can put together concise investor packages to attract capital. This allows the builder to focus on his project, while we are finding the best solution for his capital needs.

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