Jack Miller and Marcy talk about a $500,000.00 loan we provided an CRE investors securing a 11% minority non liquid ownership interest in a Multi Family Partnership.
Marcy: Hi Jack.
Jack: Hey Marcy. Berger, I think I get this right. How are you today?
Marcy: Great.
Jack: So, I want to talk about an exciting deal that we did.
Marcy: Just closed.
Jack: Yes, yes. We did it in conjunction with our sister company Quick Liquidity. We provided, um, and I think it funded—I forget when, the last couple of days, whatever.
Marcy: It funded, I think we funded, um, Monday.
Jack: Okay, well, that doesn’t matter. Um, we provided a $500,000 loan on a non-liquid limited partnership ownership. So, here’s the story: a very experienced developer investor who happens to be an attorney.
Marcy: Yep, he was an attorney.
Jack: Um, who I’ve known for many, many years– decades, not years, uh, owned, I believe the number was 11% or 11.33%.
Marcy: Yeah, something like that.
Jack: Something like that of, uh, a hundred—my numbers may be off—192-unit apartment building in Delaware, and he needed capital. You know, part of the problem is when you own real estate, and this was, by the way, a beautiful building—almost 100% occupied, had a ton of equity in it. It was gorgeous.
Marcy: A Class A.
Jack: Class A Beautiful piece of real estate worth a fortune; everything was great about it. But you know, we see this all the time. Just because you have uh equity in real estate doesn’t give you money to pay the bills or go grocery shopping or go out to dinner or whatever you need cash to do that. And the downside of real estate is there’s a lack of liquidity, and we provide that liquidity and we do it all the time. So, this is the deal, like I said we did with our sister company Quick Liquidity, who my son Yoni runs. And what we did was we provided him—he owned 11% or 11.3% whatever the number was—we provided him a $500,000 dollar loan. It’s not secured by the property, it’s secured by his partnership interest. Uh, he called me to walk you through the timing on it. I approved it literally on the phone. I quoted it out on the phone. I think it was the following Friday or maybe two Fridays before…
Marcy: And we started working on it in the office, we started processing…
Jack: And it was ready to close and give or take a week or so. So, these—a week, these happened—she did all the heavy work. Uh, these happen very, very quickly. Um, there’s a lot of complications to them. It’s different than a real estate deal because there’s no mortgage, there’s no title, there’s no things like that. It’s more of a legal due diligence in terms of uh, is it permitted within the partnership? You have to sometimes get the partner’s consent and things like that. The bottom line is…
Marcy: But it can be worked out and we do them.
Jack: We do it, all the time. The bottom line is, and we’ve created a whole business through it, through Quick Liquidity. It’s incredibly successful. The bottom line is that we provide Capital on LP interest, limited partnership interest, GP interests as well as waterfalls. Um, if a GP has a waterfall that we believe is worth money, we’ll monetize that for them. And we can monetize it in terms of either providing them debt on it, or we’ll buy them occasionally. So, we can provide debt and or buy them. So, it’s a very unusual product. It’s a very nuanced product that you really have to be on the ball and there’s a lot of pitfalls, but the bottom line is, we wired out last week, uh, five hundred thousand dollars.
Marcy: Everyone was happy.
Jack: And everyone was happy. Um, and Quick Liquidity actually did a very similar deal to that last week too. So, we actually did two of these deals last week. So, most people don’t know about this product. You know, we came up with this idea, to be honest with you, uh, when after the crash of ’06 to ’11 when it happened to me, I had a lot of money in real estate. There was no way to get it out. So, then I said, “Let’s come up with this product.” So, that’s a scoop.
Marcy: It’s very successful.
Jack: Very successful. Uh, Marcy did a great job in her team. Like I say, it’s a legal due diligence process.
Marcy: Yeah, there’s a lot of attorneys involved, there’s documents, um, but you know what? It all went very smooth. Everyone cooperated. Uh, everything did what needed to be done.
Jack: We met the borrower’s needs.
Marcy: Yeah.
Jack: He’s happy.
Marcy: He’s happy.
Jack: He, uh, borrowed the $500,000 he needed for another purpose, so I call it a good day.
Marcy: It was a great day.
Jack: Remember, if you have LP interests, GP interests, or waterfall interest, a little bit unusual to borrow money or sell them, but we do it all the time. Give us a call at 561-221-0900. Um, check us out at Gelt Financial. What else did we leave off on this thing?
Marcy: That’s it, extension 103.
Jack: You can ask for Marcy at 103. Take care and have a fantastic day. Bye.
Category: Deals Done
Tag: Delaware
