Nicholas Place is Assistant Vice President of Commercial Lending at Bridgewater Bank. He has over 5 years of banking experience in areas ranging from personal finance to large commercial real estate lending. Currently his role focuses primarily on real estate lending with local successful entrepreneurs in the Twin Cities metro area. He has direct lending experience involving residential rehabs, multi-family properties, retail strip centers, industrial building, office properties, single family construction and specialty financing relating to Letters of Credit and Tax Credit Bridge loans. InvestProp asked Nicholas 5 multifamily relevant questions. More information can be found on his website or you can contact Nicholas directly at (952) 893-6846 or nicholas@bridgewaterbankmn.com.
1) Tell us about the products and services Bridgewater Bank offers to multifamily owners and investors?
Bridgewater Bank has numerous products that are catered specifically to the multi-family investor. First and foremost, we’ve designed lending programs to address the various financing situations that many multi-family investors typically encounter. These include short-term acquisition financing, mini-permanent financing for the mid-term hold, short-term bridge financing until long-term debt can be sourced, and construction financing to improve an existing property or purchase, renovate and stabilize in a reposition scenario.
Bridgewater has also geared a number of deposit products to the needs of apartment owners. This includes our E-Deposit products which allow you to make deposits remotely from your home or business office, eliminating time consuming trips into the bank. Also, we’ve created E-Cash Management which allows you to pay taxes, originate ACH transfers, send wires, and assign access controls to various users. These products are all geared toward simplifying your banking so you can focus on your business.
2) What is the typical size or value of property and loan amount that Bridgewater looks for? Are there properties or loan amounts that do not fit?
Bridgewater Bank has experience financing properties as small as single family rentals all the way up to large apartment buildings. Due to our (relatively) small size, our target market tends to fall in the 12-125 unit properties located within the Twin Cities Metro Area. This tends to result in loan sizes that are between $250,000 – $10,000,000.
While we have experience in lending on small unit properties (less than 4 units), these small loans tend to be more difficult for us to finance. This is largely due to current exposure in this collateral segment and our need to continue to diversify our loan portfolio. As a result, our underwriting on these types of properties tends to be so conservative that there are lower cost providers in the market.
3) Bridgewater Bank is a local, portfolio lender correct? What difference does that make to Minnesota multifamily owners and investors.
Correct. Different from many larger lenders, Bridgewater Bank “portfolios” each loan that we originate. Meaning that we don’t package and sell off the loans to other banks, which then handle the servicing and take on the risk. This changes a lot as it pertains to the local borrower. Since we fully expect to keep the loan until it’s paid off, our underwriting of the transaction may be more thorough than it would be with a larger lender. We also almost exclusively require personal guarantees on our loan when someone borrows through an LLC. Furthermore, our loan terms tend to be shorter than larger lenders as we primarily finance on 3-7 year balloons.
Although there can be many differences in the structure of the credits, it’s our belief that the benefits outweigh negatives. As a local lender, we have years of experience lending in the local market, which not only helps us to avoid potential lending pitfalls, but can be a source of knowledge for our customers to rely on to help them avoid similar mistakes. Additionally, our customers enjoy the fact that our lenders and bankers are with them through the life of the loan. We strive to have a solid understanding of their long and short-term business model to structure products accordingly.
4) Are you processing a lot of multifamily refinancing in today’s market? Any advice for owners before they call you and pick up the phone and say they would like to refinance?
We’ve certainly seen the amount of refinance activity increase over the last 12 months. This is due to a number of factors, but primarily resulting from an improving multi-family market coinciding with an improving banking industry. As banks continue to bolster their balance sheets and reduce problem assets, they are beginning to source new avenues to deploy lending dollars. Since the multi-family market is one of the few bright spots in the commercial real estate environment, this increased competition has forced lenders to reduce interest costs to remain competitive.
If someone was looking to begin the refinance process, I would suggest starting with the bank that already has your loan. They obviously liked you and your project enough to provide you with financing at the onset, odds are, they’re still interested in that type of product and would want keep your business. If you can’t make any headway there, I would begin with trying to locate a bank that you feel fits into your business model. Then I would organize your personal and business finances BEFORE you meet with a prospective lender. Having these items in order will drastically improve the quality of the conversation when you first meet. Lastly, I would suggest calling to introduce yourself, but do what you can to meet with them in person. This can expedite the approval (or denial) process as it allows both of you to ask questions.
5) Is there any way you can quantify or discuss the value of Bridgewater Bank to a repeat client versus the alternative–sourcing funds through a bank with no relationship after closing?
In many cases the value of having a banking relationship is somewhat intangible. It’s tough to quantify what it’s worth having a banker with whom you have a history and they understand your business.
However, I would say that this value is most apparent when working on a project requires immediate action. I can recall numerous scenarios where a customer had a short deadline due to a short-term opportunity or financing that fell through at the 11th hour. Having a banker that knows you as a borrower, has underwritten your financial profile, and is nimble enough to underwrite a transaction with a streamlined approval process, makes it possible to turn around financing within a few days on even large and complex transactions. These are opportunities that may be lost had you been forced to start a banking relationship from scratch.
Lunch & Learn
Please join InvestProp for its monthly “Lunch & Learn” event. InvestProp will begin with a brief market update, followed by Nick Place, Assistant Vice President – Commercial Lending at Bridgewater Bank. Nick will detail the multifamily finance market and the value Bridgewater Bank brings to its clients as a lender that “portfolios” or holds loans on its books. An open Q & A and networking opportunity will conclude.
