Archway Capital, a Los Angeles-based private real estate investment firm that has historically focused on senior bridge lending, is expanding its platform to include first mortgages, mezzanine debt and preferred and co-GP equity through a new fund.
As part of this effort, the firm recently made two senior hires to help boost its origination nationally, Tom Noble, senior vice-president and chief operating officer, told Real Estate Capital. Max Kirschenbaum, director, came on board from Fundrise to facilitate originations nationally, while Greg Schecher, director, joined from Keystone Bridge Capital to head East Coast originations.
Archway’s efforts to broaden its lending platform have been in the works for more than two years. Spurred by the understanding that the last cycle was getting long in the tooth, Archway wanted to be ready for what it believed would be an opportunity to tap into a liquidity premium in different parts of the capital stack, Noble said. The firm declined to comment on the size of the fund.
This led Archway to start the Rockford Fund, through which it aims to originate loans of $3 million to $15 million over the next three years, Noble said.
Archway targets value-added and opportunistic acquisitions and recaps of transitional assets, working through a series of open-ended funds, joint ventures and separate accounts. The firm historically had been a senior bridge lender, originating one-year loans that have been paid back in nine months, according to Noble.
“[With the expanded platform], we will invest in less liquid parts of the capital stack as we try and capture the liquidity premium,” Noble said. “We will evaluate opportunities on a deal-by-deal basis with the aim of figuring out how we can hit our return target with the optimum amount of risk. On a less institutional deal, we can go into the more conservative part of the capital stack.”
The firm is underwriting its first investments and is looking in fast-growing US markets, Noble said. The new push is a complement to Archway’s existing lending platform, which originates short-term, non-recourse fixed-rate senior debt of $2 million to $20 million, with loan-to-value ratios of up to 75 percent. These loans are typically used to acquire or recapitalise industrial, multifamily, office, single family residential and a handful of retail assets in dense, urban markets, Noble said.
“We are really operators first and foremost, principals who are self-made real estate players with deep operational experience and the ability and acumen to originate preferred equity, GP equity or mezzanine debt,” Noble said.