As seen on: REAL ESTATE FINANCE TODAY (December 24, 2001)

BOND STREET CAPITAL NETWORKS THE NATION
by Michael Murray, Staff Reporter

(Lead in)
"National lending team" originates commercial loan products on a local basis.

(Article)
What for Barry Reiner began as an idea to build a national conduit lending operation became, after a look at the commercial mortgage-banked securities market, a more dynamic entity for the future.

Reiner, president and chief executive officer of Bond Street Capital in New York, said that the impact on global capital markets from the October 1998 liquidity crisis gave him the impetus to add other loan products to CMBS offerings. The events of September 11 confirmed his decision.

"By having the ability to switch gears and focus more heavily on a product that is in favor is a big advantage," Reiner said.

Reiner had been working with Joseph Forman, founder and chief executive officer of RainMaker Financial Associates (RFA), to develop its branch office system of more than 1,400 commercial mortgage brokers. RFA had been taking originated loans from its network of brokers and "marketing" them to more than 30 client lenders for financing, including First Union Securities in Charlotte.

RFA had been a large producer for First Union Securities when Reiner was First Union's managing director of the CMBS group.

However, Reiner had become disenchanted at First Union and left in January 2001 following three years of successful production. He approached Forman with the idea for Bond Street Capital as a national lender with branch offices

" A lot of national lenders have come to the conclusion that they can't operate in a cost-efficient way generating loans" Forman said. "By teaming up with the [RFA], [Bond Street Capital] gets a national origination network without the expense of generating that product themselves. It's a good marriage."

After making a determination that the branch office system could send its products to BSC, Reiner and Forman formed a joint venture, took 28 RFA commercial mortgage broker firms and converted them into BSC lenders.

The national lending team, called The Bond Street Capital Branch Office Network, has branch offices that have the Bond Street Capital name, offers products and retains its brokerage business. BSC is given the first chance at a deal, but if it passes on an origination, the branch offices can send the loan to another lender in the original brokerage name, according to Reiner.

"We are trying to go where the demand is" Reiner said. [Branches] are telling us what products they can sell and we are trying to develop those products for them."

Bond Street Capital will, in some cases, keep loans on its own warehouse line and aggregate them for securitization or whole loan sale, but it might also have presold loans going to its institutional investors.

"There are a variety of different exit strategies depending on how we see the markets and the type of loan we are originating," Reiner said, adding that flexibility - a variety of executions and not being locked into one strategy - is an important factor for him.

Reiner would not comment on investor names, but did say that they include "name-brand investment banks".

Bond Street Capital is now able to fund CMBS loans as well as credit tenant leases, mezzanine funds, bridge loans and some portfolio products. At this time, the pipeline consists of one-third CMBS loans, one-third credit tenant leases and one-third non-capital market products.

BSC hopes to close a unique $20 million credit tenant lease product early in the first quarter of next year. It is an "unusual execution" that provides for a 1.0 debt service coverage and limited due diligence, according to Reiner.

"It is an extremely attractive product," he said.

Reiner oversees loan production in New York and Forman manages the branch office system, administrative functions and technology management from RFA in California.

The partners found the local branch network to be advantageous for CMBS loans since CMBS and other Wall Street centered executions are more difficult with lenders that are "distant" in New York.

"The whole deal management functionality is difficult from a distance," Forman said.

But Reiner and Forman pointed out that a loan officer at the property and in a client's office, who understands the local aspect of the real estate, improves the execution of the deal.

BSC has exceeded its original schedule of starting with 14 offices by doubling it to 28 branches. The company should be moving up to 40 branches across the country by the end of the second quarter next year.

The branch network, New York "factory" and institutional investors are tied together through MortgageRamp's Deal Central technology in which a completed loan package is sent electronically to the "factory" for evaluation and production.

BSC already has about $350 million in the pipeline since opening on October 15. It has $80 million under application, term sheet or commitment, and Reiner projects $400 million to $500 million in CMBS product for 2002 with another $300 million for CTL and portfolio products.

"We have a fairly ambitious plan and intend to make a mark," Reiner said