As seen on: Real Estate Finance and Investment (Sept 22, 2003)

Bond Street Expands Church Loan Program, Adds Staff

Bond Street Capital has expanded its new church loan program and is working to include lending to synagogues and real estate owned by not-for-profit companies. Separately, the West Palm Beach, Fla., company also has added senior- and junior-level staff in several parts of its business and is seeking loan originators for its West Palm Beach and Los Angeles offices.

The company originated its first church loan last month (REFI, 9/25). Bond Street is not planning to securitize this loans, said Barry Reiner, ceo. The company expects to originate these loans on behalf of investors who are comfortable placing them on their balance sheets for the long term, he added. “These are real estate loans from a collateral perspective. Its also a market that has not been tapped by other lenders, he said, noting that there are no capital market-type constraints on these loans.

Cash flows from church loans depend on how much the constituents are willing to contribute. “The biggest problem is that cash flow is not set in stone like they are in an apartment buildings but there are formulas to use based on the time of year and the number of congregants, Reiner said. The non-recourse loans have a maximum term of 25 years and have no prepayment penalty, said Ned Hoskin, who was recently promoted to director of the Bond Street Express program, which includes the church lending program. “The interest rates vary from 7-8 1/2%, depending on the strength of the church and the contributions of the congregants, he added.

Separately, Bond Street has hired Robert Margolis as director of its retail loan program production. Margolis, formerly president of Western Empire Savings, came out of retirement to take the position. The company also added Kimberley Lanner as an analyst in its Los Angeles office, Robert Fagan as a deal manager and Jeff Moss as a loan officer. Bond Street is looking for an experienced loan professional in its West Palm Beach office. The professional would be responsible for building a production team to market Bond Street loan products directly to borrowers in South Florida. It could hire two more people for this effort in Florida and could add a similar staffer in Los Angeles.