Specialty Real Estate Finance

In addition to developing it’s own projects, Oppenberg deploys its own balance sheet & know how to finance and underwrite investments in third party developments.

We only invest in regions and asset classes that we thoroughly understand and only finance real estate developments that we are certain we can complete ourselves, should the third party developer encounter problems.

We are particularly interested in financing infrastructure and government backed transactions where we can add our significant structuring expertise in addition to investing as JV partners.

Many developers are locked into construction and supply agreements that are time based and these developments are often funded out of progress payments from buyers as each successive stage of the development is completed.

Occasionally, the developers are offered opportunities to accelerate the progress of their developments by pre-funding a greater portion of the work enabling a larger amount of contractors on site to complete the development faster.

In the current market environment, the ability to pre-fund your contractors and suppliers with cash up front often allows the developers to obtain better materials or technology at favorable prices.

Faster completion times for developments are generally appreciated by 90% or more of end user buyers that are impatient to occupy their new dream homes and as a consequence these buyers are even more likely to invest in subsequent projects.

Oppenberg funds developers that are seeking to accelerate their development cycles.

Many buyers of off-plan properties find that there circumstances have changed and that they are unable to make the final payments to developers.

Depending on the circumstances and the developer, this creates a risk of partial or total loss of their investments so far.

The traditional solution is to sell the incomplete property however in the current market environment that isn't always feasible due to:

1. Banks won't mortgage an incomplete property.

2. Developers stand to gain when buyers default & can hinder the sales process.

The off-plan unit owners can therefore faces the following choice;

1. Let the purchase agreement lapse, write off the investment and hope that the developer does not pursue the debt.

2. Sell the incomplete unit at a substantial discount to the market value of equivalent completed units.

3. Obtain Bridging Finance to complete the payments to the developer and then market the completed/handed over property to end users.

Bridging finance is typically utilised for a short period of time such as 6 to 18 months, and then repaid once the properties are sold at full market value.

Bridging finance is more expensive than mortgage finance but importantly, it only applies to the borrowed amount and as such often works out cheaper than selling the entire asset at a substantial discount.

For sophisticated off-plan buyers with partially paid up units which have no existing finance agreements in place, Oppenberg is able to co-invest in these units on terms equivalent to bridging finance.

Mezzanine finance is often described as a ‘hybrid’ or ‘halfway house’, combining elements of debt and equity funding to deliver an effective and relatively cost-efficient solution to finance growth strategies that entail an element of risk.

Traditional debt providers such as bank lenders tend to be cheaper than mezzanine but these institutions are usually inflexible, cautious and slow to fund anything which is not plain vanilla mortgage business.

On the other hand, equity investors, such as Private Equity firms, VCs and Business Angels take large equity stakes in companies in return for their cash, and the cost of capital is typically above 30%.

Mezzanine finance provides an alternative. Essentially mezzanine finance providers lend money on the same basis as banks but at a higher coupon. Some mezzanine firms may also seek to share in growth by building an element of equity investment into the deal.

Thus, if the business grows, the mezzanine provider will secure an additional return through the increased value of a limited amount of equity.

This equity component means that mezzanine providers are more comfortable with risk.

Oppenberg has gained significant experience in resolving stalled real estate development projects.

Typically these projects stalled due to a lack of cashflow and subsequent delays have created additional liabilities which developers have been unable to discharge in order to restart the projects.

Oppenberg is able to acquire and/or finance such projects where we have determined them to be feasible.

Typically we work on or carry out due diligence/feasibility on several projects in markets like Dubai with varying ticket sizes from as small as $10m up to $1bn.

We are open to working with existing developers, new developers, unit owners and the Land Department to find solutions for particularly unique projects.

A Stretch loan is a form of financing secured assets and cash flow.

Such financing is suitable for two types of companies:

Companies that have substantial asset base but do not have stable or predictable cash flows.

Companies with healthy cash flows but lower assets. In this case, a pure asset-based loan would be insufficient.

For each type of company, the senior stretch debt financing takes advantage of the combination of the company’s assets and cash flow to make significantly more debt available than would have been otherwise.