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Strategy
BridgePoint provides our financial partners the privilege of
participating in marquee real estate development projects
internationally – in a proprietary manner that provides a combination
of capital preservation and fixed appreciation – by creatively meeting
the needs of the global development and lending community. By
implementing proven financial models, BridgePoint provides the global
real estate community a method to participate in the different facets
of real estate development having mitigated much of the financial risk.
BridgePoint has four proprietary real estate strategies:
• Structured Credit Enhancement (SCE)
• Structured Debt Conversion (SDC)
• Structured Hedge Auctions (SHA)
• Structured Distressed Portfolios (SDP)
All four strategies provide for the following
conditions:
• Capital Preservation
• Pre-Negotiated Appreciation
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o Experience starting net profits of 40% to 60% - regardless of
market conditions |
• Defined Exit Strategy
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o Require developers to resell your unit(s) for a premium prior to
releasing any of the developer’s units to the general public |
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o Require developers to resell your unit prior to project
completion |
Structured Credit Enhancement (SCE)
Regardless of a developer’s size or experience, developers are
conventionally required to pre-sell or pre-lease at least 50 to 70% of
a respective project, in the form of preconstruction or pre-lease
contracts, to secure and draw upon their construction financing.
Depending on the size and location of a project, this process can take
anywhere from three months to three years.
SCE involves identifying development projects in specific
geographic markets and asset classes in need of
preconstruction/pre-lease contracts in order to secure and draw upon
this construction financing (to learn more about BridgePoint’s due
diligence process, please click here). By providing seasoned developers
with the preconstruction contracts needed to meet this
presale/pre-lease requirement in a timely manner, BridgePoint is able
to obtain the following terms above and beyond the previously stated
terms, such as:
• Capital Preservation
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o Require developers to release the deposit back, with interest, to
the purchaser in the event of project failure (even in bankruptcy).
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o Prohibit developers from accessing the deposit. |
• Leverage
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o Utilize "no fee" letters of credit as a substitute for a cash
deposit |
For additional information on the Structured Credit Enhancement
strategy, please click here.
Structured Debt Conversion (SDC)
Upon project completion, developers are conventionally required to
repay a construction loan in full within short order. The predominant
challenge that developers are facing in current market conditions in
the United States is that a large number of the preconstruction
purchasers are failing to “close” – either by choice or failure to
secure mortgage financing. The NAHB recently released a study stating
that 40% of the preconstruction purchasers nationally were failing to
close. The result of this widespread phenomenon is that developers are,
for the most part, unable to repay their construction loans.
Structured Debt Conversion provides developers with a short-term
solution to repay the construction loan in full by replacing the
construction debt (senior and mezzanine) with end-user mortgages. By
providing the sufficient number of qualified purchasers to purchase and
close on enough inventory to repay the construction debt in full,
developers will typically agree to the following terms:
• Repurchase Obligation
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o Developer agrees to repurchase the BridgePoint units for an
agreed-upon premium within 3 – 5 years through the utilization of
permanent financing |
• Carrying Cost Assumption
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o The developer agrees to assume all closing and carrying costs
until such time the unit is resold |
For additional information on the Structured Debt Conversion strategy,
please click here.
Structured Hedge Auctions (SHA)
For projects that have been foreclosed by the construction lender,
the Structured Hedge Auction strategy provides the construction
lender/developer with the opportunity to divest the inventory in its
entirety within 90-120 day period. The method that BridgePoint is able
to consummate this strategy is proprietary in nature.
For additional information on the Structured Hedge Auction strategy,
please click here.
Structured Distressed Portfolios (SDP)
For bank portfolios of notes and REOs, BridgePoint provides our
partners with the ability to purchase REOs and notes from the financial
community at a 70+% discount with a defined exit strategy. The method
that BridgePoint is able to consummate this strategy is proprietary in
nature.
For additional information on the Structured Distressed Portoflio
strategy, please click here.
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