The commercial real estate industry is facing its share of challenges, considering the fact that so many people are working from home (and not in offices) and retail is riding a slippery slope as more people shop online.
But from downturns, opportunity emerges.
Enter OptioLend, a new startup that wants to help individual investors take advantage of opportunities in commercial real estate by connecting them with “the best possible” lenders. The Columbus, Ohio-based company launched its marketplace Tuesday after months of operating in private beta.
The new platform uses an AI-powered algorithm and a database of more than 9,500 capital sources to help prospective real estate borrowers in search of debt financing find lenders “with the best terms.” In other words, the company’s self-proclaimed mission is to become the “LendingTree for commercial real estate.” (For the unacquainted, Charlotte, North Carolina-based LendingTree is an online marketplace that provides consumers multiple offers from several lenders for things like mortgage, student and personal loans.)
In fact, Joel Lowery, a former LendingTree executive who built the back end of that company’s platform, helped build out the OptioLend portal serving in a technical advisor capacity along with former data scientists at IBM.
Once an investor applies for a loan, OptioLend identifies up to 20 lenders best suited for that application based on recent lending history and other criteria. Borrowers and brokers can negotiate and close deals from within the company’s platform via the mostly automated process, the company claims. But it’s also launching “with a concierge service of experienced capital advisors” to help guide users who need help during the loan procurement process.
To get off the ground, OptioLend last year raised about $1 million in seed funding led by the Schottenstein Family Office with participation from Loud Capital and MLG Ventures. For context, the Schottenstein family is one of the largest private real estate owners in the country.
CEO Richard Geisenfeld said there’s a plethora of lenders that can lend at that price point, whereas there is “a relatively small pool of capital sources” that focus on deals above $10 million.
“Capital markets are experiencing a 50% surge in refis and new loans as the markets start to rebound from COVID,” he said. “And as existing loans start coming due, we think we’re in a perfect timing to roll out. Properties are going to be repurposed, and are already starting to be.”
And while OptioLend can work with institutions and individual investors, it’s more focused on the latter.
“Institutions have a lot of choices,” Geisenfeld said. “Individual investors do not.
Geisenfeld said he comes from a family of developers and himself has closed about $1.7 billion worth of transactions in 44 states as founder of Capital Commercial Partners. He’d been representing the Schottenstein family for nearly 20 years before the concept behind OptioLend emerged.
As an experiment prior to the formation of OptioLend, the family office had reached out to more than 50 lenders in an effort to finance the purchase of a small single tenant, triple net portfolio. They were surprised to discover that the interest rates varied as much as a full percentage point.
“Every time we did a deal with them, we’d hear anecdotally there were better [loan] rates out there and they agreed that we needed to create some kind of efficiency and automation,” Geisenfeld told TechCrunch. “So I went to one of my colleagues and asked ‘how do we change the paradigm from the traditional methodology?’ And that’s the problem we’re out to solve — by increasing an investor’s access to capital by 10 times in 10 minutes.”
The startup says it not only helps investors with new loan applications, but it can also help them refinance existing assets. Its sweet spot is on transactions in the middle market — in the $1 million to $10 million range.
OptioLend will work with commercial real estate and mortgage brokers alike either by allowing them to use the platform directly or to refer property owners to it. Their incentive for referrals is earning up to 50% of the original fees.
David Schottenstein, principal of Schottenstein Family Office, noted in a written statement that in today’s market, borrowers with limited access to capital sources sometimes sign onto loan terms with interest rates “as much as 100 basis points higher than they have to.”
“OptioLend’s ability to get deals in front of multiple lenders quickly helps ensure that borrowers are getting the best terms possible,” he added.
https://ift.tt/eA8V8J OptioLend launches new marketplace to become ‘the LendingTree of commercial real estate’ https://ift.tt/3rICysx
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