Post Road Group, a Stamford, Connecticut-based adviser and manager focused on alternative investments in private credit, private equity and real estate, believes volatility across the US real estate capital markets is creating an opportunity to expand its footprint in strong submarkets of larger cities.
“Volatility is a positive for us since it allows us to maximize our advantage as a lender that does not rely on the loan financing market to execute,” Jason Carney, partner of Post Road Group, told Real Estate Capital USA.
The firm last week funded a $148 million construction loan for a multifamily property in Hialeah, Florida, as part of its strategy of targeting cost-effective submarkets in the shadows of larger cities.
“Hialeah is a perfect example of that,” said Carney. “The projects that tend to grab the headlines are usually at the high end of the rent spectrum, but we love the Hialeah Metro Parc project because it will provide new housing for Miami residents that need and deserve better housing options at an attainable price point.”
Post Road is focused on projects with a meaningful value-add component, such as asset renovation, repositioning, ground-up construction and land. Given that profile, it caters to borrowers that seek a lender partner who can help them implement that value creation strategy while maximizing the efficiency of their equity.
“As a balance sheet lender, the capital markets disruption has been a positive for us, as we have seen a meaningful increase in activity since borrowers value our style of loan execution now more than ever,” he added.
Post Road Group’s most recent financing was originated on behalf of a partnership between New York-based investment firm Baron Property Group and Miami-based developer MG Developer.
The planned asset, Metro Parc, will be a two-tower, mixed-use apartment property set to deliver 559 rental units, co-working facilities, a pool, gym and ground-level retail spaces. Construction will commence in December 2022 and is expected to complete in the second quarter of 2024.
“We believe that the supply-demand dynamic within the multifamily sector supports a meaningful increase in new development projects,” said Carney – adding that what attracted the firm to Hialeah was the submarket’s robust population base.
“This loan checks all of the boxes for us: a high-growth market where the pace of supply is not matching demand, an experienced and well-capitalized developer with deep local roots and a strong construction team.
“MG Developer and Baron Property Group were able to acquire the land at a tremendous basis, allowing us to create an extremely efficient debt capital structure for them.”
While Post Road Group has a largely optimistic approach, the outlook is not all rosy.
“We’re most concerned right now about the path and pace of cap rate expansion and the commensurate impact on property values,” Carney said. “However, the positive effect of that expansion should be lower development costs, which can balance the negative effect of lower valuations, and we are overall optimistic about our ability to continue to efficiently finance strong borrowers with high-quality projects in growing markets.”