Solid ground: The role of a banking partnership in a shifting real estate market

Reliability: Timeliness and certainty of execution

Sometimes, opportunities present themselves that are possible only with timely and certain execution. In December 2021, AEW was presented with an industrial portfolio acquisition in Detroit that required a prompt closing. Unfortunately, getting a lender to transact on a large portfolio late in the year and during the holidays — when activity typically slows down — presented a challenge. Adding to the difficulty, the sale had to close in less than 30 days or risk not closing at all.

“We had to quickly line up the acquisition financing, and CIBC recognized the same opportunity we did — a high-quality portfolio of well-leased industrial assets at below-market rents,” said Della Porta. “We saw it as a unique opportunity, and we needed certainty of execution. CIBC presented a proposal, and we closed flawlessly within 30 days — it was a seamless execution.” 

“As a firm, AEW strives to align with financial partners who can execute and deliver on loan terms in a timely fashion,” Della Porta added. “When transacting, you need to have 100% certainty your partner is going to perform as expected.”

Reliability also implies consistency, and Bridge Investment Group found that CIBC could be counted on to deliver on both. “Having a partner like CIBC means that when they give us a commitment, we can rely on that for our closing,” said Slager.

Jay Eisner, co-founder of LEM Capital, a private equity firm focused on multifamily investments, agrees that CIBC’s ability to expedite a transaction is critical. “A deal was presented to us by one of our long-standing operating partners. Their bank had run into some capacity problems and had to back away from the deal,” Eisner explained. “Our first call was to CIBC. They stepped up and underwrote the transaction in a timely manner so that we didn’t miss a beat.” That deal was completed in less than 30 days during the year-end holiday season.

Flexibility: Adapting to new circumstances

While shifting markets may present opportunities and challenges, borrowers also evolve, grow and adapt. And they need an understanding partner. 

Boston Capital Real Estate Partners (BCRE), a company that specializes in value-add and opportunistic investments in multifamily housing, historically operated under a separate equity account model. In 2017, BCRE added a multi-investor discretionary fund program focusing on value-add apartment properties. CIBC was able to show BCRE how a range of products and services could meet its varied needs at both the property and fund levels. 

In 2020, BCRE launched a second fund, maintaining the focus on value-add multifamily. “Shifting to a fund model provided additional opportunities for a lending relationship with CIBC,” said Mark Dunne, managing partner at BCRE. 

A value-add strategy involves acquiring properties that need capital upgrading and repositioning them, to achieve their highest and best use. These buildouts and refurbishments require lender flexibility in providing debt capital, which CIBC has been able to creatively provide. 

“We’ve done four property deals and two fund-level facilities with CIBC, and we placed all our domestic deposits with them,” Dunne continued. “That’s an indication of how we feel about CIBC.”

Jay Eisner of LEM agrees about CIBC’s adaptability when his firm came to them in a critical moment. “CIBC stepped up in a big way and put together a bridge subscription facility, which was a unique and customized product. They did a great job working with us on a creative solution.”

The bottom line: A long-term partnership

“In our business, lending has become commoditized,” said CIBC’s Deftos. “So, the secret sauce is the ability to be a long-term partner through market cycles. And you can do that only through trust and transparency.”

CIBC’s relationship with AEW started out with only a few transactions and grew into a partnership. According to Della Porta, “I can pick up the phone and ask Jesse, ‘What do you think about this or that?’ I can trust who’s on the line, and I value their opinion.” 

The advantage of working with CIBC is feeling that you have a partner, according to Eisner. “When we’re doing a transaction, everybody should be working together as a team to get the deal done. I’d rather feel like I’m on a basketball team than like I’m in a boxing ring. With CIBC, we feel like we’re on a basketball team. We’re running plays together and are doing well.”

IRE is a part of the CIBC US Commercial Real Estate (CRE) line of business. CRE builds banking relationships with dynamic and growing real estate developers and investors across the US, and delivers lines of credit, refinancing and financing for construction, acquisition and redevelopment. 

If you have any questions for CIBC’s Institutional Real Estate team, please contact Elizabeth Smart at Elizabeth.Smart@cibc.com Opens your email app.. Or call 347-749-0441 Opens your phone app..

*As of June 30, 2022.