3650 REIT originates $103m mezzanine loan for Southern US multifamily deal

Co-founder Jonathan Roth expects firm to originate more gap and bridge financings in current market.

3650 REIT, which last week originated a $103 million mezzanine loan for a multifamily deal in the southern US, is expecting a heavy pipeline of opportunities to fill gaps in the capital stack with mezzanine debt or preferred equity, or by originating bridge loans across the US.

Jonathan Roth, 3650 REIT co-founder and managing partner, told Real Estate Capital USA this week the firm is staying active as a senior and mezzanine debt provider as well as a preferred equity provider for all asset classes nationwide.

“As the need for gap and bridge financing grows, we expect to increase our origination volume to meet those needs,” Roth said. “[We have] developed expertise in funding ‘gap capital,’ as our in-house underwriting, structuring and rated special servicing capabilities enable us to participate in investment opportunities where other capital providers may not be able to do so.”

This focus on gap financing is illustrated by the $103 million mezzanine loan the firm originated on May 30, providing financing as part of a larger capital stack for a 12-asset multifamily portfolio dubbed the Southern Residential Portfolio. In the deal, 3650 helped to fund the recapitalization of the portfolio, which is comprised of 3,500 units across Georgia, Louisiana, South Carolina and Tennessee.

3650 originated the debt funding from its Bridge and Event Driven lending platform for a joint venture between David Wener Investments; Onyx Partners, a real estate investment firm led by Jeremy Rieder; and Carlton Associates. Meridian Capital Group’s senior managing director Drew Anderman and vice-president Eddie Haber arranged the financing, which has an initial term of 24 months.

The deal was an example of the firm’s ability to do repeat business for established borrowers, Roth noted. “We built 3650 REIT for the type of moment facing today’s challenging market, and we continue to see a multitude of strategic opportunities to work with sophisticated sponsors investing in well-located assets across the US,” Roth said in a coinciding release.

Outside the 12-asset portfolio mezzanine financing, 3650 has also used its bridge platform this year to fund a $49.5 million loan to complete the construction of a 288-unit multifamily asset in Huntsville, Alabama, dubbed The Gabriel.

In January, 3650 REIT launched a transitional lending platform to sit alongside its bridge and event-driven and stable cashflow platforms. The firm was targeting $500 million of originations in 2023 for sponsors seeking recapitalizations or flexible loan deals for cash-flowing or newly constructed projects.