Author Archives: levercp

Retail on the Rebound

By: Adam Vanlerberghe, Managing Director, Lever Capital Partners

With news of a different large retail chain closing down stores or filing for bankruptcy seemingly every week, there has been little reason for optimism for the retail real estate owner and investor. While the collapse of large retailers is very real and prevalent, there are signals that the sector’s decline has leveled off. There are several contributing factors to this apparent stabilization including creative tenant-mix repositioning, federal interest rate cuts and an overall improvement about the sentiment in the retail sector from the lending/investing community. 

Retail owners and managers now have more of a focus on bringing in a tenant mix which includes entertainment and lifestyle businesses in order to create centers with more of a social experience. Restaurants, bars and other entertainment related businesses are helping drive consumers to the centers thus increasing the overall foot traffic and exposure to all surrounding businesses. Service oriented tenants are also being sought after by retail owners and managers as these businesses cannot be as easily replaced by the ever-growing online shopping phenomenon.  

Notable changes in the federal interest rate have also helped the retail industry rebound. Just as quickly as we watched the Federal Reserve raise rates in 2018, we saw them fall once again with three straight rate cuts to end 2019. Due in part to the federal rate cuts and the repositioning to more entertainment-focused tenant mixes, the lending and investing community within the retail real estate sector has finally started to thaw.

National Real Estate Investor (“NREI”) recently published an article which highlights notable findings from a survey of 231 real estate professionals about the sentiment in the retail sector and found that “the share of respondents saying capital is more available than a year ago rose to 20.8 percent for equity (up from 12.7 percent last year) and 18.9 percent for debt (up from 13.3 percent in 2018)”. With regard to real estate investors buying, selling or holding retail property, the article further noted that “…sentiment began to swing a bit on investors’ plans to buy… The buy figure is the highest in the five years NREI has been conducting this research.”

We’re Here to Help

Lever Capital Partners has helped our clients fulfill their capital needs including ground-up development financing, bridge financing, permanent financing as well as joint venture equity investments. To learn more about these trends and how they might affect your business, or if you have questions regarding a commercial property, reach out to us at Lever Capital Partners and we will evaluate your project.


Adam Horowitz Ideates Law Amendment, Positively Impacting Commercial Real Estate Lending in Nevada Starting in 2020

Chapter 645B of NRS Relating to Commercial Mortgage Lending is Amended, Allowing for More Growth and Opportunities in Nevada

LAS VEGAS, NV. Dec. 12, 2019 /PRNewswire/ — In a change positively impacting lending in Nevada, lenders who are unlicensed in the state of Nevada may conduct transactions through a licensed mortgage broker in the state, effective Jan. 1, 2020. Chapter 645B of NRS relates to commercial mortgage lending in the state of Nevada. The bill exempts wholesale lenders who only fund or purchase commercial mortgage loans from obtaining a license. The recent assembly Bill No. 398 amends Chapter 645B by adding the line, “The provisions of this chapter do not apply to a wholesale lender who only funds or purchases commercial mortgage loans.”

Prior to the amendment, the law required persons and entities engaged in mortgage lending in Nevada to be licensed by the Commissioner of Mortgage Lending in Nevada. Lever Capital Partners’ Principal, Adam Horowitz, said, “It was difficult for the state to track the transfer of funds, as the state lacks the staff to properly track the companies lending with or without a proper license. Often the state focused primarily on unlicensed residential loans, therefore groups either lent illegally, filed for an exemption, or forewent lending in the state altogether.”

Adam Horowitz, was aware of the complications this was causing within the industry and wanted to enact change. Horowitz spearheaded the amendment to the bill as he knew this would be beneficial to the state and open doors to out-of-state capital providers wanting to lend in Nevada. The bill will allow projects to be completed more easily, promote competition and increase dollars flowing into the state. The state will also be able to monitor deal traffic more easily as the transactions will be better regulated.

Lever Capital Partners maintains a commercial lending license within the state of Nevada and is on the board of the Nevada Advisory Council on Mortgage Investments and Mortgage Lending. The firm is an experienced commercial real estate finance brokerage company, providing capital on transactions over $5MM across the United States. It offers its clients the resources of a national platform with the personal commitment of a boutique company. The team’s track record demonstrates a commitment to serving financing requirements in nearly all types of real estate income-producing and developmental projects. LCP is a proud member of RECA, the Real Estate Capital Alliance, a consortium of 20 companies covering every major metropolitan market across the United States financing over $5.2 billion in 2018.

For more information about lending in Nevada, please contact Adam Horowitz at (212) 493-5400 or

SOURCE Lever Capital Partners

What’s the One Element Everyone is Searching for in Multifamily?

By: Adam Horowitz, Principal, Lever Capital Partners

Do you want to live and work near public transit? I certainly do, and so do many others, including a majority of millennials. As George Bluth said, “there’s always real estate money in the banana stand.” OK, he didn’t say the real estate part, but you get the idea. Populations worldwide are moving closer to urban centers – the United States is no exception. It’s happening everywhere, but nowhere is it more prominent than in the so-called 18 hour cities where public transit used to be an afterthought. The impact is large, as we see more investment dollars being used to build multifamily and office properties near transportation alternatives.

One of the main reasons we are beginning to see this transition is that Millennials and Gen Zs are ditching cars at a fast clip and have to get around somehow. So, it’s either stay landlocked in the suburbs or move to more urban neighborhoods with good transportation options. Who wants to sit in traffic in Atlanta, Boston, or Los Angeles when you can walk to work then meet friends or family easily at the end of the day before heading back home lickety-split.

This is taking place across the United States. True 18-hour cities like Denver, Nashville and Dallas are offering the amenities of the Big 6 Cities, at a fraction of the cost, with a growing set of public transportation options. Secondary cities such as Denver and Minneapolis-St. Paul has extensive light-rail systems, which have a very high usage rate. These cities are less expensive to live in than New York City, Chicago, and Los Angeles, which are all seeing residents leaving at an alarming rate.  

Developers are smartly capitalizing on the desire of people wanting to live, work, and play within short distances of each other. Being in these locations also allows them to achieve cap rates similar to their central business district counterparts. Research shows, “public transit’s benefits go beyond moving people from point A to point B. Transit creates value and, as a result, influences development and business location decisions (NREI).” Consequently, equity investors are focusing on mass transit and “walk scores” much more than in previous years. As usual, the smarter real estate groups will “follow the money” so, if that’s where the equity dollars desire to go, then that’s where they’ll build.

All in all, this is a positive move for our changing population. People are moving closer to cities and want access to live, work, play environments. Secondary and tertiary markets are in higher demand due to their available transit options. The more demand for these projects results in lower cap rates and more equity investor interest. 

We’re Here to Help

At Lever Capital Partners, we have seen a large amount of projects needing debt and equity capital for projects in close proximity to transit. Whether your project is missing guarantors, GCs, or local sponsors, we can help fill in the gaps. To learn more about these trends and how they might affect your business, or if you have questions regarding a commercial property, reach out and we’ll evaluate your project.


Shock Waves Hitting Retail in 2020

By: Amnon Cohen, Director, Lever Capital Partners

The two biggest drivers causing shock waves in the commercial real estate retail sector are the proliferation of online shopping and the consumption habits of millennials. As a result, there has been a steep decline of traditional retail malls across the United States. Recent reports indicate that upwards of 20% of stores are at risk of losing an anchor tenant resulting in possibly 25% of them closing by 2024. Developers and investors are now scrambling to find the right tenant mix that will attract more people to shop at their centers, thereby providing a more stable income base.


The ease of purchasing goods online is clearly the main factor why so many name brand retailers are filing for bankruptcy ,or liquidating entirely. In 2019 alone, big name brands like Gymboree, Payless, Forever 21 and Barneys New York have all either filed Chapter 11 to restructure their debt, or close all their stores as part of a Chapter 7 bankruptcy. It is easy to buy baby clothes online, but how about a gallon of Milk? Grocery stores have been a mainstay of in-line shopping centers for years, and are holding their ground, but there has been an uptick of grocery operators shipping locally to consumers thereby chipping away at that sector as well. 


Millennials represent 30% of all retail sales, shop 50% online and are the major drivers for the changes discussed above. As they continue to move into urban areas, convenience is an important factor as it becomes more difficult to shop in denser areas. Therefore, millennials are looking to shop with brands that can provide a seamless experience online and off. As a retailer you’ll need to be able to create an experience where consumers can easily find the same products and deals from mobile phones to computers to in-store purchases.


There have been countless articles about the need for retailers to provide more of an experiential store, thereby drawing in people to get an experience they can’t get online. Retailers are adapting by bringing technology to their stores such as automated checkout lines, robots for customer service, interactive price comparison and other services that enhance the consumers shopping experience and provide an alternative to shopping from home.  But what do we do with all the retail that’s already been built? We’ve seen malls being converted to office buildings, shared office space, trade schools, colleges, fulfillment centers and other industrial uses which are in high demand.

Capital Availability  

Finding capital requires a concrete plan by the owners. How are you going to replace the tenants that have liquidated? Are you going to replace them with a stronger tenant who has a better lease guarantee? If you’re going to convert your building to a different use, how do we know you have the expertise to accomplish that? Whatever plan you have, make sure you can back it up with a lot of data and bring in any partners that have an expertise that you’re lacking. The best way to gain access to attractive capital is to have the entire plan well thought out without any holes. Reach out to us if you would like an evaluation of your retail project.

We’re Here to Help

To learn more about these trends and how they might affect your business, or if you have questions regarding a commercial property, reach out to us and we will evaluate your project.

Commercial Real Estate Investment As Recession Talk Increases

By: Adam Vanlerberghe, Lever Capital Partners

The chatter about the next recession continues to get louder, but the commercial real estate (CRE) investment appetite remains strong and highly liquid. CRE lenders continue to be well capitalized, but their lending parameters have become narrower and they have become more cognisant of ‘downside protection’ in the event of a recession. To do so, lenders may begin to adjust their portfolio’s exposure to market risk in hopes to reduce capital losses that result from significant asset declines. 

Lenders are now especially attracted to cash flowing, or near-cash flowing value-add projects. Multifamily and other workforce housing fits this profile and continue to be a popular asset classes for many lenders. Alternatively, lenders have become more conservative with their approach to ground-up development projects, which typically require longer time horizons before generating revenue and realizing value creation. If a recession were to take effect in the next 12 months, as some economists have predicted, they don’t want to be left holding the bag by committing their funds to a development project that might take 18 months or longer to build and lease-up. At Lever Capital Partners, we work to anticipate these lender concerns and can help our clients position their projects to navigate such challenges.  

Lenders are also now looking outside of the major markets and gateway cities in search of stronger and more stable economic fundamentals. This notion was further explained by Peter Muoio, Chief Economist at Ten-X Commercial, “In order to gauge the resilience or vulnerability of markets to a potential downturn, it really depends on how high vacancies are and how much development is occurring. That said, we are long into this cycle and property prices have been generally bid up in gateway and major markets, which are typically the first to attract investment earlier in a cycle. This leads investors to search for yield in secondary and tertiary markets.”

At Lever Capital Partners, we are constantly interacting with the commercial real estate lending and investing community which allows us to think like a lender or investor. By doing so we are able to anticipate and mitigate their concerns in order to best capitalize our client’s projects. 


Lever’s Angle on 2020 Real Estate Investment Strategies

By: Adam Horowitz, Lever Capital Partners

Where are we in the cycle:
We’re on a 10+ year run of economic expansion since the fourth quarter of 2008 and people have been predicting a recession for a couple of years now. Since news outlets have to sell ads, there are stories littered with the mention of an “inverted yield curve” predicting an upcoming decline. It’s certainly not a foolproof predictor of a pending recession and in any case it’s flip-flopped back and forth a few times already this year.

Regardless of some possible indicators, investors are certainly worried about a global economic slowdown and the threat of an ever-escalating trade war. What do they do when they feel that way; they flee to higher-quality assets both on the real estate side and as well as long-term US government bonds. There have also been interest rate cuts which are having an impact on the industry. “As a result, there may be some incremental cap rate compression in some markets and property types as lower interest rates reduce upward pressure on cap rates” according to a report from real estate services firm CBRE (NREI).

What are the possible solutions:
Not surprisingly, there’s been an immense amount of development during the growth period. Some of it necessary, especially in sectors like industrial and student housing, and some geographically needed in the “smile states” where population continues to increase. In late 2019 we’re seeing development slowing down as it becomes more difficult to arrange debt and equity financing. That’s certainly not for a lack of deal flow, just what’s actually capable of getting done. Many of our clients, who are both developers and value-add buyers, are moving the needle more towards the acquisition business and away from longer term development projects that might catch them in the middle of an economic downturn.

Value-add deals tend to have a timeframe somewhere in the 1-3 year range which gives sponsors the ability to sell a cash flowing asset more easily. Even if you don’t complete your full improvements, a cash flowing asset still has value and maybe the LP investors get their money back but won’t realize the lofty IRRs predicted by their GP partners. Our most successful clients sell once their greatest returns are realized. I have a feeling we’re going to be seeing faster turnaround in the next year.

We’re also seeing a shift to more NNN deals. Sponsors who haven’t been in the space in the past are looking to park some of their money in safer transactions that can weather a storm and come out the other side relatively unscathed so they’ll have a lot of cash when the market bottoms out. There has been a lot of groups getting their toes wet in this space, which is super competitive, making it hard to find a good deal.

What we can do for you:
In short, A LOT. We’ve been arranging Joint Venture equity financing for value-add transactions across multiple sectors as well as financing NNN development and acquisitions. Everyone and their sister wants to buy value-add multis so you either have to find off-market transactions or seek another asset class that’s lets competitive to find an interested LP. For NNN deals there are many financing options on the acquisition side if you’re acquiring the asset at a market cap rate and we’re arranging development projects at 100% LTC plus pursuit costs.


Changes Looming at Fannie Mae and Freddie Mac

By: Amnon Cohen, Managing Director, Lever Capital Partners

The Trump Administration led by Mark Calabria, lead Director of the Federal Housing Finance Agency, is making a push to re-privatize Fannie Mae and Freddie Mac by removing the agencies from government conservatorship. 

In August 2008, the U.S. government took over both agencies as they were heading towards insolvency. This was a result of the Great Housing Crisis caused by the subprime market crash and subsequent recession that followed. In September 2008, the U.S. Congress authorized $100 billion in bailout funds for both agencies to keep them afloat. The recovery in the housing market enabled Fannie Mae and Freddie Mac to return to profitability and eventually repay the U.S. Treasury the entire bailout amount plus an additional $20 billion in interest. 

Fannie Mae and Freddie Mac are now making loans at a record setting pace. The current administration, and some economists, believe it is time to make the agencies private again. The current administration believes the GSE’s (Government Sponsored Enterprises) are a burden on the government and if regulated should be ran by a private enterprise. However, there are many in the real estate industry who feel that a private company who lacks the backing of the U.S. Treasury may unnerve investors and result in agency backed loans to become more expensive and volatile. As news of the impending privatization trickled through the market, Fannie Mae multifamily loan spreads spiked 50 basis points while similar loans in the private sector remained steady or decreased. 

Michael Bright, President of the Structured Finance Industry Group and the former acting President of Ginnie Mae, told Bloomberg that keeping Fannie Mae and Freddie Mac structured exactly as they are and releasing them to privatization is a “dangerous experiment.” There are several reasons for Mr. Bright’s fears. The two main dangers are that a) A private lender is perceived to be more volatile than a government agency and b) A pure for profit lender may exclude some housing products or markets that they may deem as less profitable

The National Association of Realtors also supports an explicit government guarantee. NAR President John Smaby penned a letter to Mr. Calabria stating that any reforms must be well designed and thoroughly vetted before implementation. He also added that any reforms that take place should keep in mind the GSEs public mission which is to  “provide liquidity, stability, and affordability to the U.S. housing market”.

We at Lever Capital Partners share the sentiment of if it ain’t broke, don’t fix it. Currently, Fannie Mae and Freddie Mac are the leading multifamily lenders in the country, and their aggressive lending rates and terms have trickled down to others in the lending industry including: banks, life insurance companies and CMBS lenders. Privatizing the agencies may change the parameters that are currently in place, which may affect, rates, terms, leverage and capitalization rates in the most influential segment of the Commercial Real Estate Industry.


When Big Banks Pull Back On CRE Lending

By Adam Vanlerberghe, Lever Capital Partners

A strong recent economy combined with loosened regulatory constraints have contributed to a healthy commercial real estate (“CRE”) lending environment. 

In such an environment, banks often look to put out more capital and be a bit more aggressive with their underwriting. Back in 2017, large banks with more than $100 billion in assets experienced a 5% growth rate in commercial real estate lending, according to Fitch Ratings. In addition to increased activity, we saw banks offering loans as high as 75-80% loan-to-cost (“LTC”) on construction projects. Higher LTC ratios have certainly been welcomed by our commercial real estate developer/investor clients as it lowers their required equity contribution, thus allowing them to pursue additional investment opportunities and/or limit their need to bring on added partners.

However, that 5% growth rate reported by large banks in 2017 shrunk to 1.2% in 2018, according to Fitch. The reduced growth rate is likely to coincide with more conservative underwriting from these larger banks. As a result, underway construction projects may have difficulty when transitioning from their high LTC construction loan to their take-out/permanent loan facility in a more conservative lending environment. This can especially be the case when a recently completed project needs time to reach stabilization and/or didn’t realize enough value creation during the development period. When this occurs, the permanent loan proceeds being offered may not be enough to fully payoff the high LTC construction loan.
The team at Lever Capital Partners (“LCP”) helps our clients navigate such funding shortfalls and can often bring multiple solutions to the table such as a bridge loan, mezzanine loan, preferred equity or joint venture equity. We always consult with our clients and carefully consider their partnership structure and business strategy to help them determine the absolute best solution.
Fortunately, large banks that are pulling back on CRE lending are not the only options available, as the above funding solutions will likely be provided by a non-bank capital source. At LCP, we have a vast network, experience and long-standing relationships with private/public debt funds, REIT’s, private equity, credit unions and life insurance companies which we utilize to provide our clients with optimized funding options for their commercial real estate transactions.   


Lever’s Angle from ICSC 2019

By Adam Horowitz, Principal, Lever Capital Partners

What we learned:

This year’s ICSC continued to accelerate trends that have been propagating for a few years now; new technologies, mixed use projects, and value-add acquisitions over ground up development. As usual we met with various people at the convention ranging from owners and developers to management companies and leasing agents. What we heard in these conversations last week mirrored the trends that we have been seeing at Lever Capital Partners.

Technology was everywhere at the conference as vendors, new and old, were fighting for a seat at the proverbial retail table. Their goal is to convince the masses that these innovative concepts could drive retail tenants back to their brick and mortar locations.

Mixed-use projects were also at the forefront as evidenced by many multifamily, office and hospitality attendees. Everyone is trying to figure out the perfect combination of uses that will drive traffic and keep their consumers engaged and on-site.

Lastly we had many conversations about rehabbing existing assets rather than providing capital for ground up products. This is due to the ability to modify these types of properties much below replacement costs given rising construction costs.

What are the possible solutions:

Did you know that Augmented Reality in retail is a thing? According to JLL President and CEO Retail Americas Gregg Maloney, “AR is going to impact retail in a way we all really don’t understand right now, but we’ll have to embrace it because when retailers start bringing it into their store, owners and developers will have to bring it into their property.” Maybe this will happen soon or maybe not so fast, but it’s clear that current stores must do something to enhance the in-store experience, especially to appeal towards millenials and Gen-Z patrons.

Many of our meetings this year included some form of the live, work, play lifestyle. The challenge many of our clients have is that they really only know the retail space and need to be able to put together a team of experienced multifamily, office, and hospitality sponsors to compete in the mixed-use arena. Mixed-use projects have always been harder to finance as both lenders and investors have a harder time underwriting all of their uses, typically feeling  more comfortable financing a single use. But the times, they are a changin’ as we’ve started to see more capital providers underwrite to various uses as long as there is a strong sponsorship team in place. ICSC conducted a survey in late March of more than 1,000 adults, finding that 78% would reside in a “live, work, shop and play”community due to the convenience/efficiency and easier access to amenities. (Sleter, 2019).

Given the concerns that lenders and investors have over the amount of time it’ll take to build a brand new asset vs rehabbing an existing one, many owners are pouring money into the ones they already own. Current owners are under pressure to modify their store lineup and are adding “water features, art, and interactive experiential displays”, according to Bisnow’s Joseph Pimentel. The good news coming out of ICSC is that Gen-Z are patronizing malls because they see it as a destination. “Gen-Z cites the abilities to socialize, physically see items and get them immediately as their top reasons for going to stores,” said the ICSC study. “Nearly two-thirds of Gen-Z say it is important when buying online for that retailer to have a store nearby.”

What we can do for you:

We understand how the rapidly changing climate of brick and mortar commerce is continuing to challenge retail owners and developers. Our mission, as always, is to find the best capital providers to help our clients fund their projects. Knowing which capital providers are interested in working with retail sponsors who are using new technology, working on mixed use projects, or rehabbing older assets will allow us to help retail sponsors secure the best available capital for these projects.  If you’re wanting to get creative with your retail project, we’d love to help. Schedule a call today and our team will happily evaluate your project!


2019: The Market Ahead

By Max Bleiler, Lever Capital Partners

Investor appetite is lessening in 2019, according to firms surveyed for the 2019 Annual Investor Intentions Survey by CBRE. Of those surveyed, 98% intend to continue making acquisitions in 2019, but anticipate that they will do so at a slower pace. Furthermore, they are increasingly looking to secondary markets as well as alternative asset classes for yield. Amongst investors, the majority of investments are being made in pursuit of a stable income stream, followed by expectations of capital appreciation. This makes sense as prices across asset classes and markets are at or near all time highs.

Amongst investors, there is continued fear that 2019 may be the year of a global economic downturn. As we are all aware, this fear has been a growing concern over the past few years, but there has yet to be any strong indication that the apocalypse is now. Secondary to this concern is fear over what rising interest rates will do to the economy. At this time, the Fed seems to have indicated that they are taking a break from raising rates, so this fear, at least for 2019, can be put to bed.

Atlanta, Denver and Central Texas markets have emerged as leading metropolitan areas for real estate investment in 2019. Amongst Tier I cities, Boston and Chicago remain in favor while New York, Seattle and D.C. fall behind other Tier II and Tier III locations, including Las Vegas. These trends are continuations of what Lever Capital Partners has seen over the past few years and expects to continue to see moving forward.

Across asset types, industrial reigns top amongst investors. This continues a duel between industrial and multifamily spanning several years now. As tech giants continue to develop distribution plans for our increasingly e-economy, large investors have indicated they believe this sector is ripe with opportunity. Across asset types, value-add strategies remain most popular amongst investors, a trend that has now been increasing for nearly half a decade which Lever Capital Partners expects to continue in the short term. To the surprise of many, retail continues to hold its ground as an investment class, despite much buzz about the so-called “death of retail”.

Looking to the year ahead, the study indicates that 2019 is forecasted to be a slower version of 2018. Many of the concerns of the market have been sustained for several years now and trends in favorable real estate classes, investment strategies, and geographies are continuations from what Lever Capital Partners has seen in the past. In our experience over 2018, we saw increased activity in the senior housing, student housing, and industrial sectors. We anticipate these trends to continue as we move further into 2019.

At Lever Capital Partners we work closely with developers and owners to connect their projects with capital appropriate to their needs. We appreciate and anticipate the challenges the market cycle can bring to real estate transactions. We pride ourselves on our ability to have open conversations with clients and provide quick feedback, as to the market appetite, for their bespoke products. When partnering with developer clients in early stages, we are able to provide our market forecasts and help guide clients toward more financially feasible transactions.

CBRE Americas Investor Intentions Survey 2019