High growth in short-term bridge loan business

Real Estate Weekly, June 2, 2004

In a number of real estate finance scenarios--the need to obtain immediate funding for a time-sensitive acquisition, to renovate, retrofit or retenant undervalued properties, to recapture equity by refinancing at higher loan-to-value than conventional banks on stabilized properties, among them--savvy property owners know that bridge loans are a sound business strategy.

"Short-term financing structures play a critical role in a borrower's ability to take advantage of time-sensitive and value-added real estate opportunities," says Jeffrey Gould, president and CEO of Great-Neck-based BRT Realty Trust. Gould should know.

His company, a public mortgage REIT traded on the New York Stock Exchange (NYSE:BRT), specializes in providing bridge loan financing borrowers need, when they need it.

"A bridge loan is a short-term solution, frequently turned to when borrowers are unwilling to be bogged down with delayed or rejected loan applications from commercial lenders," said Gould. "Many of our repeat clients are financially sound property owners who turn to us because of the ease and speed with which we complete transactions."

Established in 1972, Gould took the helm of BRT Realty Trust in 1984 and has subsequently grown the company into one of the nation's leading resources for short-term loans on income-producing properties.

BRT differentiates itself by over 30 years of experience in the field of unconventional lending, remarkable financing skills through which even complex loans are quickly closed, and by its platinum reputation for integrity.

The latter is, according to Gould, a significant factor in BRT's growth and repeat clientele. "There are many real estate finance circumstances where a short-term loan is the ideal solution, yet borrowers shy away from pursuing the option because of negative perception of the sector," he said. "The key is to seek out institutional unconventional money lenders with ethical reputations."

BRT, as a public mortgage REIT traded on the New York Stock Exchange (the company celebrated 15 years of being traded by ringing the Stock Exchange bell), significantly sets itself apart from the competition.

"We respect our commitments and have a repeat clientele due to the honest and forthright manner with which we treat our borrowers," said Gould. "Clients who work with BRT have complete confidence that we offer absolute integrity in addition to quick response, innovative financing solutions and a strong financial base."

Prepayment ability of BRT's short-term loans is another differentiating factor in working with the company. "We appreciate and accommodate our borrowers long-term goal of refinancing with a traditional lender," said Gould.

When a borrower accomplishes a less expensive source of financing, BRT has no prepayment penalties, lockout or exit fees.

BRT's affiliate companies include Gould Investors L.P., an owner/operator of office, professional, residential, retail and industrial buildings nationwide; One Liberty Properties, a publicly held REIT traded on the New York Stock Exchange (OLP) and single tenant net-lease owner and purchaser of commercial, industrial and retail properties; and internal construction, brokerage and property management companies.

"Borrowers who turn to bridge lenders are often in unusual positions--a time-sensitive opportunistic acquisition, the need for immediate capital for an owned property in duress, to buy out a partner or reposition a property, or to stave off foreclosure or bankruptcy. In these situations, a lender's ability to provide immediate response is critical," said Gould.

The combined specialized real estate knowledge of BRT and its affiliate companies makes a singular difference in the company's ability to analyze deals quickly, complete transactions with alacrity and be entrepreneurial in its lending.

BRT funds loans from $1,000,000 to $50,000,000 on diverse commercial properties nationwide including multifamily residential apartments; shopping centers; industrial buildings; owner-occupied properties; stadium-style movie theaters; office buildings; cancelable government lease properties; single tenant net-leased properties; underlying co-op loans; condominium conversions; hotels and motels; and unsold shares. The company also participates in joint ventures on income-producing properties.

In addition to their large clientele in the New York Metropolitan Area, the company has funded loans in California, Colorado, Florida, Maryland, North Carolina, Connecticut, Georgia, Texas and Washington, D.C. With all loans, appraisals are not required and brokers are protected.

Dependent on circumstances, in real estate finance, a borrowers smartest move may be unconventional.

Considering the vast differences among unconventional lenders insofar as rates, terms, penalties, operating philosophies, financial ability to fund transactions and industry reputation, upon making the decision to seek short-term funding, the next smartest move is toward BRT Realty Trust.