Multifamily Real Estate Finance

Delivering customized bridge and permanent loan solutions for Multifamily Real Estate 

Multifamily Bridge Loan Programs

Loans for Multifamily and Apartments (5+) Units

In any housing market there will always be a need for rentals. Multifamily, apartment buildings and student housing can be a profitable option for real estate investors to consider. Multifamily buildings with five or more units can create positive cash flow for multifamily investors, especially when leveraging Wilshire Finance Partners’ creative and sage advice to achieve stabilized value.

While agency-based loans through the Federal Housing Administration offer permanent financing for some investors, there are many transactions where expedited timeframes are crucial to making the deal happen. Multifamily bridge loans provide fast financing and certainty of execution, especially when a transaction may fall outside of traditional lending parameters.

Wilshire offers customized bridge financing solutions for a variety of multifamily properties nationwide for up to five years, ranging from $1 million to $10 million, with no prepayment penalty. Since 2008, Wilshire has funded more than $30 in multifamily bridge loans, helping commercial real estate investors capitalize on eligible properties with creative and quick bridge loan programs.

To learn more about Wilshire’s multifamily bridge loan programs, explore the options below.

Multifamily Bridge Loans: What They Are & How They Work

A multifamily bridge loan is a financial tool used by commercial property owners to bridge the gap between the moment they get the loan and the moment they can do what they want to do with the property.

Non-Recourse Multifamily Bridge loan rates and terms vary subject to sponsorship, loan amount, property type, leverage and the story behind the need for the bridge financing. Some common uses of bridge loans are: construction completion, stabilization, rehabilitation, and borrower/property legal, financial, and credit issues. Construction and rehabilitation rates can be very competitive, but once you get into legal, financial, and credit issues rates change a great deal. Bridge loans are ideal for repositioning a property so as to get competitive permanent financing or sell the asset after the project is managed to stabilization or the "issues" at hand are addressed. Multifamily bridge loans can be taken out with Fannie® and Freddie® loans, CMBS financing or other bank loans. Most of the same opportunities exist with commercial real estate bridge loans in general outside of Fannie Mae® and Freddie Mac® permanent financing options. 

Multifamily Bridge Loan Guidelines

Bridge lending is short term or interim financing that is generally used by a borrower until they secure permanent financing or sell the underlying real estate. Both the Fund and the Manager employ a collateral-based lending approach in their bridge lending activities. Under a collateral-based lending approach, a lender will evaluate a borrower’s character, credit history, capacity (income or assets unrelated to the real property), cash flow from the real property and the collateral value of the real property. However, as opposed to the approach used by credit-based lenders, who place greater reliance and weight in their underwriting decisions on the credit history and capacity of a borrower to service the loan (i.e., tax return or Form W-2 income), a collateral-based lending approach places the greatest emphasis and weight on the cash flow and collateral value of the real property. The Fund’s bridge loans will not be guaranteed by any governmental agency or private entity. Most loans made by the Fund will be collateral-based loans, generally not requiring recourse, a guaranty or additional personal property as collateral.

Bridge loans made by the Fund may be in a first lien position or subordinate lien position. 

Participating loans are structured as debt with equity-like economic attributes.  Participating loans may be secured in first lien position, however, participating loans are more frequently a type of subordinated financing used to increase leverage in a real estate transaction. When used as subordinated financing, this type of debt generally fits between equity and senior real estate secured debt in the capital stack.  It has priority of repayment over equity but is subordinate to the real estate secured debt.  The primary benefit to the borrower using participating loans is the ability to increase their leveraged returns at a lower cost than preferred or common equity.  Due to the lower overall cost, Borrowers may use participating loans in lieu of preferred equity in the capital stack. 

Participating loans may be directly secured by the real estate in a senior or subordinate lien position.  If the borrower defaults on a participating loan secured by the real estate, the holder of the participating loan has the right to foreclose on the real estate and take it ownership of the underlying real estate subject to any senior liens.  Further, participating loans may be structured as real estate-based debt, but not directly collateralized by the underlying real estate.  In such structures, the participating loans are secured by a pledge of the borrower/sponsor’s ownership interest in the entity that owns the underlying real estate.  If the borrower defaults on a participating loan secured by equity in the entity that owns the real estate, the holder of the participating loan has the right to foreclose on the pledge of the ownership interests of the entity that owns the underlying real estate and take over the ownership of that entity.  That would result in the ownership of the underlying real estate subject to any real estate secured debt. 

Because of the equity-like participating returns, participating loans are sometimes compared to preferred equity, which is a class of ownership senior to common equity.  The primary differences between participating loans and preferred equity are that preferred equity (1) is not a loan, and (2) continues to participate in the ownership of the real estate once the principal amount is repaid.  Conversely, once a participating loan is repaid, the holder of that loan no longer participates in any gain or appreciation in the underlying real estate.  As a result, participating loans result in a lower cost of capital to the borrower.  While having greater risk than senior secured debt, because of its priority over equity, the holders of participating loans generally have less risk than equity holders.  As a result, the holders of participating loans may obtain higher returns than real estate secured debt or mezzanine debt and may be in a more protected position than equity. 

Frequently Asked Questions

  • Loan amounts are determined by total project cost or completed value and not necessarily on income in place or the as-is value, although in-place income helps drive down rates.

  • Fast closing process.

  • Available when other portions of the credit market are locked up tight.

Related Transactions

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(866) 575-5070
info@WilshireFP.com

Wilshire Finance Partners, Inc.
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Newport Beach, CA 92660

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TERMS OF USE | DISCLOSURES | PRIVACY POLICIES

DISCLOSURES: 

Loans: The information contained on this website and the related communications are directed to real estate professionals only.  The information contained on this website and the related communications are not a loan approval, agreement or commitment to lend. The delivery or circulation of any attached documents is for discussion purposes only and Wilshire Finance Partners, Inc. may make substantial and material revisions to the same.  Rates and terms are subject to change without notice.  Loans made by Wilshire Finance Partners, Inc. California Department of Real Estate Broker License number 01523207 and California Department of Financial Protection and Innovation, Finance Lenders License number 603K729; WFP Income Fund, LLC, California Department of Financial Protection and Innovation, Finance Lenders License number 603K726; WFP Opportunity Fund, LLC California Department of Financial Protection and Innovation, Finance Lenders License number 603K725; or WFP Income Fund REIT, LLC, California Department of Financial Protection and Innovation Finance License number 60DBO-99184. •Equal Opportunity Housing Lender•

Investments: The information contained on this website and the related communications are not an offer to sell or the solicitation of offers to purchase the securities of the WFP Income Fund, LLC, the WFP Income Fund REIT, LLC, the WFP Opportunity Fund, LLC, loan or trust deed investments, participations or other securities offered by or through Wilshire Finance Partners, Inc. (individually and collectively, the “Securities”).  The purpose of this website and the related communications is to provide an overview of the respective Securities and their private placement. Persons interested in learning about the Securities and their private placement will be provided with the respective Private Placement Memorandum (inclusive of exhibits thereto and any supplements, the “Memorandum”), which provides a description of the Securities, the terms of their private placement, a discussion of risk factors, a copy of the limited liability company operating agreement for the respective fund (as applicable), a subscription agreement and other information related to the Securities.

This website and the related communications contain certain forward-looking statements regarding the Securities and the investment objectives and strategies of each of the Funds. The forward-looking statements are based on current expectations that involve numerous risks and uncertainties which are difficult or impossible to predict accurately and many of which are beyond the control of Wilshire, as the manager of the Funds. Although Wilshire believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements, the inclusion of such information should not be regarded as a representation by Wilshire, any placement agent, or any other person, that the objectives and strategies of the respective Securities will be achieved.

Investments in the Securities may only be made solely by accredited investors (which for natural persons, are investors who meet certain minimum annual income or net worth threshold), who are provided with the Memorandum and who complete, execute and deliver the subscription documents included therein, and otherwise comply with the requirements contained therein.  Each of the Securities is being offered in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) and are not required to comply with specific disclosure requirements that apply to registration under the Securities Act. Neither the Securities Exchange Commission nor any other state securities commission or agency has passed upon the merits of or given its approval to the Securities, the terms of the offering, or the accuracy or completeness of any offering materials. Each of the Securities is subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell the Securities. Past performance is not indicative of future results. Investing in any of the Securities, including the Funds, involves substantial risk, including loss of investment, and is not suitable for all investors.

To the extent there is any inconsistency between the information provided in this website. The related communications and the Memorandum, the information contained in the Memorandum shall control.

Other Notices: Information provided by Wilshire Finance Partners, Inc., its affiliates and their respective directors, managers, officers, employees and agents is not to be interpreted as legal, tax or accounting advice.  Wilshire Finance Partners, Inc. is a debt collector and is required by law to inform you that this communication may be an attempt to collect a debt and any information obtained will be used for that purpose.  Wilshire Finance Partners®, Proven Professional Performance®, Stable Income & Principal Protection®, and The Alternative Solution® are registered trademarks of Wilshire Finance Partners, Inc. © 2021 Wilshire Finance Partners, Inc.  All rights reserved.

 

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