The Lending Process
How your capital is deployed, protected, and returned.
How your capital is deployed, protected, and returned.
How your capital is deployed, protected, and returned.
Understanding how GMI Capital lends is understanding how your capital is protected. Every decision, every parameter, and every principle below exists for one reason: to give you consistent returns without taking on unnecessary risk.
Understanding how GMI Capital lends is understanding how your capital is protected. Every decision, every parameter, and every principle below exists for one reason: to give you consistent returns without taking on unnecessary risk.
Rule number one: do not lose the money.
Rule number one: do not lose the money.
Ours and yours. Every other rule exists to make this possible.
Where We Sit
Bridge debt: where capital preservation meets equity-like returns.
Bridge debt: where capital preservation meets equity-like returns.
The capital stack has three layers: permanent debt at the bottom, equity at the top, and bridge debt in between. Permanent debt offers the lowest risk but also the lowest yield. Equity offers the highest potential return but also the highest risk. Bridge debt captures the best of both.
Lower risk than equity
Reliable cash flows and returns
Secured position in real estate
Scheduled exit with defined term
Equity-like return profile
conclusion
Bridge debt is the only position in the capital stack that checks all five boxes simultaneously.
It is why GMI Capital has focused here across three fund generations.
The Parameters
Precision protects capital.
Precision protects capital.
Loan Size
$3M to $20M. Large enough to be institutional. Small enough to be underserved by the big players.
Loan Size
$3M to $20M. Large enough to be institutional. Small enough to be underserved by the big players.
Loan Structure
First position mortgages and trust deeds. We do not sit behind a senior loan we cannot repay. Second lien and mezzanine structures available on select transactions where the risk is understood.
Loan Structure
First position mortgages and trust deeds. We do not sit behind a senior loan we cannot repay. Second lien and mezzanine structures available on select transactions where the risk is understood.
Loan Term
12 to 24 month bridge loans. Extensions available to a maximum of 36 months.
Loan Term
12 to 24 month bridge loans. Extensions available to a maximum of 36 months.
Loan-to-Value
Targeting below 70%. Blended LTV across the track record is 45.4%. The asset would need to lose more than half its value before investor principal is at risk.
Loan-to-Value
Targeting below 70%. Blended LTV across the track record is 45.4%. The asset would need to lose more than half its value before investor principal is at risk.
Interest Rate
8% to 12% target. Effective rate can exceed 20% on certain structures.
Interest Rate
8% to 12% target. Effective rate can exceed 20% on certain structures.
Origination Fee
2% on all loans.
Origination Fee
2% on all loans.
Property Types
Land, single family residential, multifamily, retail, industrial, office, mixed use.
Property Types
Land, single family residential, multifamily, retail, industrial, office, mixed use.
What do we not Lend on
Highly operational assets outside our management capability. No casinos. No senior living facilities. No exurban assets without a defensible local demand story. No revolvers or construction loans without a minimum annual return multiple of 1.08x.
What do we not Lend on
Highly operational assets outside our management capability. No casinos. No senior living facilities. No exurban assets without a defensible local demand story. No revolvers or construction loans without a minimum annual return multiple of 1.08x.
How We Underwrite
Institutional discipline in a market that rarely sees it.
Institutional discipline in a market that rarely sees it.
[ 01 ]
Location first
We evaluate the submarket before the asset. Is this a top submarket for this product type? Is there high growth and natural barriers to competition? If the location does not meet our threshold, the deal does not proceed regardless of the metrics.
[ 01 ]
Location first
We evaluate the submarket before the asset. Is this a top submarket for this product type? Is there high growth and natural barriers to competition? If the location does not meet our threshold, the deal does not proceed regardless of the metrics.
[ 02 ]
Local demand story
We need to understand why this asset makes sense for this specific market, submarket, and neighborhood right now. Not theoretically. Specifically.
[ 02 ]
Local demand story
We need to understand why this asset makes sense for this specific market, submarket, and neighborhood right now. Not theoretically. Specifically.
[ 03 ]
Zoning and entitlement verification
Every asset needs the zoning, entitlements, and utility access required to go vertical. We verify this independently. We do not rely on borrower representations alone.
[ 03 ]
Zoning and entitlement verification
Every asset needs the zoning, entitlements, and utility access required to go vertical. We verify this independently. We do not rely on borrower representations alone.
[ 04 ]
Borrower track record
A great piece of paper does not necessarily mean it is a great loan. We assess the borrower as thoroughly as we assess the asset. Their experience, their liquidity, their history of doing what they say they will do.
[ 04 ]
Borrower track record
A great piece of paper does not necessarily mean it is a great loan. We assess the borrower as thoroughly as we assess the asset. Their experience, their liquidity, their history of doing what they say they will do.
[ 05 ]
Asset quality and ownership clarity
Good fundamentals, desirable location, favorable product type. We lend on assets we would be comfortable owning. That standard eliminates a significant portion of deals most lenders would take.
[ 05 ]
Asset quality and ownership clarity
Good fundamentals, desirable location, favorable product type. We lend on assets we would be comfortable owning. That standard eliminates a significant portion of deals most lenders would take.
[ 06 ]
Off-market sourcing preference
100% of Fund I loans were sourced off-market. Off-market origination means we can negotiate terms and pricing without competition. It is one of the primary ways GMI Capital generates returns above what the public market offers.
[ 06 ]
Off-market sourcing preference
100% of Fund I loans were sourced off-market. Off-market origination means we can negotiate terms and pricing without competition. It is one of the primary ways GMI Capital generates returns above what the public market offers.