Ted Van Brunt

Ted Van Brunt
As Chief Investment Officer, Ted draws from his experience in over $15B in retail, office and industrial transactions and asset management experience in over 6 million square feet of office, multifamily and retail portfolios. Ted was formerly with Cole REIT (now Vereit) and Unico Properties.

Recent Posts

Why We Like Commercial Real Estate Private Credit

Posted by Ted Van Brunt on Sep 20, 2019 10:24:28 AM

Commercial real estate (“CRE”) private credit has a place in every portfolio, especially in the current economic environment, which is marked by peak prices, volatility, and slowing growth.  This asset class has gone from being virtually untracked 20 years ago to $60B in dry powder (raised but uninvested capital) in recent months.

Regulations on banks after the last financial crisis combined with new laws benefiting smaller investors have allowed this space to thrive in the last five years. Investors have discovered its appeal and we think it’s here to stay.  Before we dive into what investors are finding so compelling, let’s define what CRE private credit is.

CRE private credit is an asset class that consists of loans backed by commercial real estate properties. The properties act as the loans’ collateral such that, in the event a loan does not perform, the lender can take ownership of the property. This structure can increase security for a lender and reduce the risk of loss on an investment.

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Topics: Bridge Loans, Investors, Private Credit

How Do Interest Rates Change at Different LTVs for a Typical CRE Bridge Loan?

Posted by Ted Van Brunt on May 1, 2019 10:29:51 AM

In December 2018, RRA Capital conducted an annual mortgage broker survey to explore how interest rate pricing changes at different leverage points for a typical commercial real estate (CRE) bridge loan.  The inspiration for this survey came from the desire to give borrowers the sharpest pricing we can at different LTV exposures by getting a better idea of current market pricing.

For the purposes of this survey, a “typical commercial real estate bridge loan” was assumed to be the following:

  • Debt Assumptions: Acquisition financing, non-recourse, 2-year term
  • Property Assumptions: General multi-tenant commercial property, class B, partially-stabilized, $15 million value
  • Borrower Assumptions: Has experience in the product type, good credit, an acceptable net worth as limited guarantor and ability to accept leverage between 40%-95% LTV
  • Market Assumptions: Well-located, infill location, in a stable secondary market


The below chart displays the survey results, which came from some of the most active mortgage brokers across the United States.  The black bold line in the middle is what RRA extrapolated to be a good average rate (internally referred to as the “Yield Curve”).  More specifically, the black line is the exponential trend line of the rate of change between the data points.  And to control for some outlying data, any data points where either the rate of change or the rate of acceleration were more than two standard deviations from the mean of the sample were excluded.

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Topics: Market Update

What is the Average Rate for a Commercial Bridge Loan?

Posted by Ted Van Brunt on Nov 30, 2018 8:55:58 AM

Have you ever wondered what average commercial real estate (“CRE”) bridge loan interest rates are or why the rates are what they are?  I’ll give you the spoiler: the average interest rate is 6.5%.  Just kidding.  Actually, the answer is: it depends.  Boring, right?  But it does depend.  It depends on things like risk profile, lender appetite, and interest rate trends.  We’ll dig a bit deeper and see if we can provide some helpful information on why lenders do what they do and what to expect in a rate.

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Topics: Bridge Loans

Top 10 Things to Avoid When Trying to Secure a CRE Bridge Loan

Posted by Ted Van Brunt on Aug 21, 2018 3:25:01 PM

Here at RRA Capital, we evaluate CRE bridge loan requests every single day. Over the last decade, several common themes have begun to arise, and we’d like to share the top ten missteps that brokers make when trying to secure a bridge loan on behalf of their client.

1.  Sloppy/No Package 

Only forwarding an OM (offering memorandum) or historical financials without putting together a package typically looks lazy or desperate.  The easier it is to cohesively synthesize the information, the better the response will be from the lender.  Lenders are ideally looking for concise descriptions of the business plan, pro forma cash flows along with assumptions, sponsor bio, and sources and uses.  A lone faxed copy of Q2-2012 cash flows likely won’t solicit a sharp quote. 

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Topics: Bridge Loans, Brokers

Q3 2018 CRE Market Update (+ SlideShare)

Posted by Ted Van Brunt on Jul 17, 2018 10:19:40 AM

Periodically, RRA will provide a brief snapshot of what we are seeing in the commercial real estate market in order to educate our clients and investors. Q3 2018 represents a poignant time in which to kick this initiative off, as interest rates and uncertainty are increasing and interest in alternative investments such as CRE are continually on the rise.

Summary

CRE values appear to be peaking but it’s not looking like a bubble as leverage remains conservative and the economy is healthy. The fundamentals are good but few are expecting large further increases in rent and values. Transaction volume is down and it will be interesting to see if there are enough compelling investments out there in order to put the sizable dry powered raised to work. The rising interest rate environment can have both positive and negative effects on CRE and we are watching this closely. Investors looking for additional security along with current income are finding a fit with CRE debt.

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Topics: Market Update