Investment banking approach to real estate finance

Real Estate Weekly, Oct 27, 2004 by Michael H. Sonnabend

To successfully navigate the highly structured landscape of the capital markets, the role of financial intermediary has drastically changed. In order to remain flexible and creative, an investment banking style of deal making is key.

Once primarily deal-arrangers, today's sophisticated financial professionals are now deal-makers involved in every aspect of a transaction. They are true financial architects bringing equal doses of capital market expertise, their own equity, development expertise and marketing creativity to the table on behalf of their clients.

An apt illustration of a flexible, investment banking approach can be seen in a recently completed assignment. AFC's ingenious solutions made possible the development of an unusual high-end loft condominium building in Manhattan's TriBeca neighborhood that deftly combines rehabilitation and new construction.

In order to get the construction and rehabilitation of a luxury condominium project started, we once again utilized an investment banking approach to implement innovative financing strategies and move the deal forward.

We were retained by a passive, non-real estate property owner who wanted to develop an underutilized landmarked project of five, high-end loft condominiums and 3,700 square-feet of ground floor commercial space located on Hudson Street in Manhattan's upscale TriBeca.

AFC was able to fulfill the client's wishes by providing 100% of the required capital, and by acting as the fee developer and financier to the owner, launching the $14 million project that included the redevelopment of an existing five-story building together with a newly-constructed 6-story adjoining structure.

We directed a team that responsibility for all aspects of the development--including obtaining approvals, retaining the architects and handling marketing and sales.

Our involvement allowed the project off the ground and turn the asset into a economically viable and successful venture.

This transaction is a prime example of how a real estate investment banking approach to financing enables us to "Make the Impossible, Possible" for clients who face difficult obstacles.

Whether is be development, acquisitions, refinancing or transactions that combine a variety of disciplines.

MICHAEL H. SONNABEND, PRINCIPAL OF AFC REALTY CAPITAL