Investing in American Emerging Markets

Industry

Financial Services

Company Type

Traditional Asset Management

Location

US

Size

+/- $100 million

Investment Type

Equity

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Helping Great Companies Grow

Overview

First Lien Capital is seeking $100 million for its newly formed US distressed residential real estate investment platform. An experienced management team that has worked together for over a decade and is investing $5 million. Managed the resolution of over $500 million of non-performing loans (NPLs) since 2009.

First lien, non-performing and sub-performing mortgage loans purchased at a discount

  • Primary mortgage loan investments (second liens purchased if 1st owned)
  • Addresses a dislocation in residential whole loans and structured products market
  • Provides liquidity to banks and leveraged investors in rising volume of NPLs
  • Targets pricing at 40-70% of current collateral value – liquidate at 75-100%
  • Average mortgage asset hold time has been 14 months
  • Purchase, resolve or rehab, and resell re-performing mortgage pools
  • All investments are fee simple title or first lien position
  • Multi-decade track record investing in seasoned mortgage whole loans
  • Decades of relationships with senior loan traders at private equity firms and banks
  • In place administrators, loan servicers, custodians, and asset management team
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Helping Great Companies Grow

Opportunity

Massive Addressable Market

US Residential Mortgage Market size is $11 trillion. At any given time, no less than $300 billion in mortgage debt is in default.  Currently, 2 million loans are in Covid-related forbearance, representing over $500 billion of mortgage debt that may go NPL in the next 60-90 days.

Access to Niche Segment of the NPL Space

Significant opportunity unaddressed by larger private equity players in the secondary mortgage market. Focus on small pools or individual loan purchases.  Less competition in the $5-15 million trade space, where reputation as a reliable liquidity provider offers an endless supply of product for sale at discount pricing.

Opportunity Should Improve as Volatility Increases.

The industry exists regardless of economic conditions; however, opportunities improve as volatility increases, real estate values plateau, or liquidity freezes. Deploying $100 million into this multi-billion market allows for significant selectivity (assets and pricing).

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Helping Great Companies Grow

Solution/Strategy

Buy Low, Fix Problem, Sell Quickly

  • Provide liquidity to holders of Non-Performing Loans (banks, large institutional investors)
  • Acquire assets at 40-70% of current collateral value, liquidate at 75-100%
  • Active Servicer Surveillance and Portfolio Management reduces resolution timelines
  • Incentivize borrowers to avoid foreclosure and offer debt forgiveness when applicable
  • Utilize a boots-on-the-ground network to initiate conversations with borrowers
  • Properly modify loans so that borrower is set to succeed and stay performing
  • Properties acquired as REO – fix-n-flip rehab strategy is employed to maximize profits
  • Average mortgage investment hold time of 14 months with de minimis number of tails
  • Focus on major metros and states where less competition exists due to perceived challenges
  • Combine mortgage credit expertise with asset management, loan, and property level focus
  • Utilize a strict bidding discipline and comprehensive due diligence and cash flow projections
Helping Great Companies Grow

Management

Bill Bymel

Managing Partner

18 years of experience in real estate. Pioneer in the distressed residential space. Created a new paradigm for dealing with delinquent borrowers. Oversaw the resolution of $250 million of NPL since 2009. Author of WIN WIN REVOLUTION. Managing Director at Spurs Capital LLC, the leading mortgage investment firm that will act as a backbone for this platform. Partner in Retail Sites International, the 40-year-old commercial real estate advisory firm specializing in retail-restaurant site selection and development. Clients include BJ’s Brewhouse, Darden Restaurants, and Family Dollar Stores.

Ari Meltzer

Managing Partner

Active in real estate since 2002. Managing Partner in numerous notable development and value-add projects across Florida, with a total asset value of over $500 million. Projects include student housing, retail, mixed-use, senior living developments, condo conversions, and multifamily value-add redevelopments. Investment strategies rooted in property-level operational enhancements and pricing advantages that arise from distressed, complex, and dislocated scenarios. Proud father of 8-year-old triplets and enjoys family time in South Florida.

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CONTACT US

Hi. We're not around right now. But you can send us an email and we'll get back to you, asap.

Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
New York, New York 10036
(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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