Structured Finance

We assist lenders with structuring and underwriting conventional and unconventional loan products, including senior/mezzanine debt as well as hybrid or “debt-like” capital vehicles such as preferred equity and convertible debt.

For structured finance projects, we are typically tasked with forecasting multiple operational scenarios for a subject property or portfolio. We then use these forecasts to assess the client’s exposure to potential payment delinquency, loan default, and balloon risk. Afterward, we work with the client to mitigate any identified risks by resizing the loan commitment, adjusting the tranche structure, and incorporating additional credit enhancements, such as reserve funds, additional collateralization, and third-party guarantees.

We understand that even the most sophisticated and robust financial models are only as useful as the quality of their underlying assumptions. What separates our firm from others is the depth of thought and analysis we put into our assumptions. In fact, clients often ask us to assist with validating specific components of their internal models versus engaging our firm to underwrite entire projects.

Illustrative Engagements:

• On behalf of an upper middle market commercial real estate lending and loan servicing firm, Blue Eddy provided an assessment of the re-tenanting risk – and the client’s exposure in terms of balloon risk – for a chemical manufacturing tenant occupying ~900k SF within a commercial lab/office building (~50% of total rentable SF). To support our recommendations, Blue Eddy thoroughly reviewed the property characteristics and condition, evaluating the suitability and cost of re-tenanting the space for laboratory use. Our research also included a detailed review of the local market, assessing the relevant tenant demand generators, existing competitive supply, and projected new inventory. Additionally, we evaluated the composition of tenant demand in the market by reviewing broker reports, analyzing data from Costar/RCA, and interviewing brokers and industry contacts.
• Blue Eddy was engaged by an upper middle market commercial real estate lender to evaluate the viability of re-tenanting a 140k SF building in South Carolina for biopharmaceutical manufacturing use. The project included primary research to assess i) the applicability and residual value of the subject building’s infrastructure and equipment for the intended use and ii) material demand drivers for advanced manufacturing users in the region. To support our conclusions, we interviewed developers, general contractors, and our industry contacts with specific expertise and knowledge of advanced manufacturing and biomanufacturing, specifically.