about us
Financial Compound is a leading national commercial real estate finance broker based in Santa Monica, California and has been an innovator in identifying and structuring capital markets opportunities. Financial Compound and its staff have closed over $2.6 billion in transactions, running the gamut from low leverage first mortgages on trophy assets, to structured debt and equity placements for properties in need of renovation, to construction and unentitled land financing. For example we assembled a 100%-of-all-in-cost financing package (including land, hard and soft improvement costs, interest reserve, and closing costs) for the developer of a shopping center with minimal pre-leasing. The transaction was crafted so that the developer kept all of the upside after a 7.5% IRR to the financial partner.
Financial Compound is experienced with many types of financial structures, including acquisition, predevelopment, construction, mini-perm, refinance, bridge, rehabilitation, value added, credit lines, forwards, mezzanine loans, joint venture equity, preferred equity, highly leveraged participating debt, unsecured debts, pledge of partnership interests, personal loans, tax exempt bonds, tax credits, credit enhancements, letters of credit, improvement district bonds, and balance sheet financings including inventory and accounts receivable loans.
Financial Compound has longstanding relationships with many types of capital providers including institutional equity, private equity, life company, bank, CMBS, hard money, hedge funds, venture capital, and “friends and family†as well as lenders specializing in non-conventional projects.
Financial Compound and its staff have financed a variety of product types, including (in alphabetical order) apartments, bingo parlors, car washes, diners, entertainment center, farms, gyms, homes, industrial buildings, jewelry building, karate studios, land developments, mixed use, nightclubs, office buildings, peaches, quiznos, retail centers, supermarkets, theaters, USTs, vacant lots, warehouses, x-ray machines, yards, and a Zany Brainy.
Financial Compound also has the skills and proven track record to assist borrowers and lenders with commercial loan workouts, having performed numerous successful modifications in a distressed context. We have resolved complex financial problems with our proven methodology and helped the parties determine the best course of action. With Financial Compound no up-front fees are required and we receive compensation only upon the closing of a restructure. This pricing model is an outgrowth of our company philosophy and is unique in the industry. Our long history and relationships with the capital providers, coupled with our in-depth market knowledge, have helped us complete restructurings efficiently. Its the Financial Compound stimulus plan- When we work out your loan, we make a beneficial impact on the economy and capital markets of greater magnitude than the transaction itself.
commitment to clients
Financial Compound maintains the highest standards of integrity and ethics in its business practices. Our processes and practices are an outgrowth of our analytical approach and keen market observation. Financial Compound’s commitment begins by carefully analyzing the client’s needs and the characteristics of each transaction. We underwrite and package a financing request, and confer with the client regarding its content and marketing approach. We often structure a creative solution derived from our extensive knowledge of the capital markets. Depending on the client’s desires, Financial Compound can ‘make a market’ by contacting numerous capital providers and managing a competitive bid process, or we can undertake a more focused marketing strategy, for example, working with one capital provider that fits well for a specific transaction.
Once we obtain preliminary financing terms for a transaction, FInancial Compound then evaluates the options in light of the client's objectives and makes a recommendation. We often provide an 'apples-to-apples' comparison of financing proposals by quantifying the present value of terms such as amortization methods, promote and waterfall structures, escrows, holdbacks, lender fees, defeasance and other prepayment penalites, etc. Additionally, Financial Compound's work ethic, attention to detail, and passion for the business- characterized by customer service, minimizes the client's involvement with processing and paperwork.
Capital providers offer cutting edge terms to Financial Compound and often their senior level professionals work with us because of our technical expertise and large business flow. We can work quickly and place a transaction within hours if necessary. We have closed an institutionally priced loan in eight business days and ‘hard money’ loans in two days.
Financial Compound’s networking advisory board of leading finance experts, accountants, tax specialists, investment bankers, appraisers, title officers, engineers, and lawyers facilitates efficient processing of transactions.
education and background of our staff
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education
- Columbia Business School
- San Jacinto Seminary
- University of the East
- University of Michigan
- University of Southern California
- Villanova University
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prior work affiliations
- Aetna real estate
- Avanti Properties Group
- Council Rock Partners
- MIG Financial
- The Yarmouth Group
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community and industry affiliations
- American Red Cross
- ARM Organization
- Beit T’shuvah
- Bnai Brith
- Boy Scouts of America
- CMBA
- Calpirg
- Crittenden
- IMN
- LACMA
- Moriah Society
- Mortgage Bankers Association
- Real Estate Cabinet
- Shelter for the Homeless
- The Urban Land Institute
representative financings
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$16,050,000
Grocery store refinance
40% LTV, 2.4 DCRTwo national chain grocery stores in prime Los Angeles locations with strong sales. Loan terms included a 67 basis point spread over the ten-year treasury, yield maintenance after a three-year lock-out, and a seven month free rate lock. No lender fee.
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$74,000,000
Office building refinance
60% LTV, 1.70 DCRAggressively priced 5 year floating rate LIBOR facility. At borrower’s request a competitive bid was conducted amongst interested capital providers. Cutting edge terms included no reserves, customization of the recourse carve-outs, limitation of lender’s approval rights, and borrower friendly provisions in the event of non-monetary default.
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$15,000,000
Retail/ mixed use Letter of Credit
100% of cost, 65% LTV, 1% interest rateStructured acquisition financing to purchase a 4.5 acre in-fill site with an effective 1% annual interest rate. Existing improvements were functionally obsolete and seller desired to remain in occupancy until relocation to new facility. Our customer took title to property and gave seller a Letter of Credit, to be cashed upon earlier of 2 years or when seller vacates property. The LC fee was 1% per year.
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$9,000,000
Condo conversion
Cash-out refinance, 78% LTVHigh-leveraged second mortgages for three in-process condo conversion projects. All were nearly completed conversion in San Diego, CA, totaling 216 units. The conversions were 75% completed at the time of funding with 40% presales. The loans were approved in one day and closed within two weeks. Proceeds were used to comply with first mortgage lender’s liquidity covenant.
| Cost | Type | Location |
|---|---|---|
| $ 5,400,000 | Unanchored Retail | Las Vegas, NV |
| $ 3,900,000 | Self Storage | Los Angeles, CA |
| $22,000,000 | Unentitled Land | Santa Paula, CA |
| $11,000,000 | Homebuilding Revolver | Orlando, FL |
| $ 8,000,000 | Anchored Retail | Jacksonville, FL |
| $15,300,000 | Office building | Charlotte, NC |
| $13,500,000 | Anchored Retail | Eau Claire, WI |
company philosophy
Financial Compound maintains the higest standards of integrity and ethics in its business practices. Our work ethic, attention to detail, and passion for the business- characterized by customer service, minimizes the clients' involvement with processing and paperwork and has helped us enjoy a strong client retention ratio.
The Financial Compound logo, “aleph to the root of pi” shown below, challenges us to pursue creative and innovative solutions to real estate finance problems. Our pursuit of this knowledge has benefited our clients in the form of financing costs and transaction structuring.
Our process includes (1) sharing transaction information and capital provider research in an organized and cooperative way at our staff meetings as part of staying abreast of capital provider preferences, new financial products, and cutting edge pricing, (2) weekly underwriting and credit training in our experiential learning environment called University of Financial Technologies held Fridays at noon in our conference room, lunch is included, (3) utilizing and enhancing numerous proprietary templates we created in Excel to process transactions efficiently, some of which model abstruse financial and mathematical concepts in a simple and understandable way. One of our staff members wrote a book entitled “Real Estate JV Equity Modeling in Excel”, (4) reading and discussion of trade magazines and finance journals, (5) utilizing state of the art computer infrastructure and information management systems to organize and work with transaction records efficiently; as well as to safeguard client confidential data (Privacy Policy), and (6) making most of the important decisions through consensus amongst our staff.
More about our logo: Financial Compound believes that in order to stay abreast and a step ahead of the capital providers’ preferences it is important to understand the mathematical aspects of the real estate capital markets, sometimes using a different notation such as aleph and pi.
Aleph is a math symbol used to express the cardinality, or size, of infinite sets as pioneered by Georg Cantor, a prolific mathematician in the late 1800s. The cardinality of a set of 3 people at a dinner table is 3, and the cardinality of the set of 100 people at a movie theater is 100. Cantor discovered that infinite sets can have different cardinalities.
Pi is an irrational number. It’s the relationship between the area and radius of a circle, equal to approximately 3.14159…. with digits continuing forever and never repeating a pattern. One cannot point to pi on the number line. We can point to a rational number very close to pi, such as 3.1416, but we can never pinpoint pi or any other irrational number.
One of Cantor’s set theory conclusions is that there must be an infinitely greater amount of irrational numbers compared to rational ones, as there is always an infinite amount of space for numbers between any two points on a number line, no matter how close together they are. Yet mathematicians have only discovered limited amounts of irrational numbers to-date. Some mathematicians have driven themselves crazy searching for the next irrational number. So let us not get carried away thinking about it for too long.
What is the pieth root of aleph? Financial Compound thinks it’s approximately the cubed root of aleph, which is equal to about aleph. What do you think? We celebrate pi day on 3/14 or the closest business day to 3/14, and you are invited to join us in our office for some pie, the traditional food for pi day.
DISCLAIMER: If you engage Financial Compound, you are engaging us to attempt without obligation to obtain financing, with our only obligation being not to commit willful or intentional misconduct against you. We normally don't charge any up-front fees. Our fee is due simultaneously to the client's receipt of financing. We can provide references from many satisfied clients and industry participants.
Current Rates
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Rates Last Updated: 10/17/2012 8:57 AM PST | Swap 10/17/2012 8:57 AM PST
USE OF THE INFORMATION CONTAINED ON THIS 'CURRENT RATES' WEB PAGE AND ANYWHERE ELSE ON THIS WEBSITE IS AT YOUR SOLE RISK AND IS BEING PROVIDED TO YOU WITH NO LIABILITY TO FINANCIAL COMPOUND AND FOR INFORMATIONAL PURPOSES ONLY. CONTENT, SERVICES, GOODS, OR ADVERTISEMENTS ARE PROVIDED "AS IS" AND "AS AVAILABLE".
selected transactions currently available for capital providers
Updated: 11/1/2011
| PROPERTY TYPE | FINANCING REQUEST |
|---|---|
| PROPERTY TYPE | FINANCING REQUEST |
| retail | $6,350,000 shopping center refinance in Santa Fe, New Mexico situated in a prime location. 79% LTV and 1.30 DCR at the property's current 65% occupancy. Historically has been 100% occupied and current vacancy is not a reflection on the property itself (Thomas). |
| special use | $20 million line of credit for tax lien purchases. LTV is less than 9%. Experienced operator in the business for more than 10 years, with more than $100 million of tax liens under ownership, and averaging a 16% IRR on cost(Thomas). |
| retail | $6 million refinance for Kmart anchored shopping center in Midwest. 50% LTV, 1.7 DCR, 92% occupied, stable operating and occupancy history (Thomas). |
| residential | $3 million JV equity for unleveraged acquisition fund to purchase foreclosed single family homes in southern CA. Borrower has track record, with the most recent fund showing a 30% unleveraged IRR. Friends and family have been the equity partners to-date (Robert). |
| retail | 65% acquisition financing for portfolio of Rite Aids in Northeast. (Thomas) |
| apartment | $20 million JV equity for conversion of vacant office building to luxury apartment complex in Texas. Very strong and experienced sponsor with track record of similar conversions. Sponsor to invest $6 million of cash equity (Robert). |
| apartment | $4 million refinance of apartment complex in southern CA. 50% LTV strong DCR. Only hitch is that borrower is delinquent with its property taxes (Robert). |
| apartment | $16 million acquisition loan, 70% LTC, 2.07 DCR for a low to moderate income apartment complex in the Northeast. Approximately 90% of the units are Section 8. Borrower is a strong credit and performs property management themselves, with a large and similar portfolio of these properties in the area (Thomas). |
| single family | $10 million facility for recently purchased and rented single family properties in Southern CA purchased at foreclosure sales. Borrower seeks 65% LTV, and offers 3.0 DCR. Experienced borrower with a long history of owning similar SF properties in the area (Robert). |
| single family | $20 million credit facility to purchase single family homes at foreclosure sale. Sponsor is one of the largest players in this arena in Southern CA. Seeking 70% LTC (Robert). |
Capital providers can contact the staff-person indicated for additional information and a copy of financing request package. For transactions where the request differs from your financing program, call us to see if Financial Compound can structure something that works for all parties. Content, services, goods, or advertisements are provided "as-is" and "as-available" To find out about other transactions we are currently placing, call 310-260-5900. Some figures are approximate.
privacy policy
Maintaining privacy of your information is important to Financial Compound. Client and transaction records, including contact information that you may provide to us on this website, are stored in our secured computer environment which exceeds federal standards for data security compliance. Records in our system are encrypted with 32 bit encryption, protected with firewall, anti-virus and other intrusion prevention protocols. In addition we have strong access control policies that require additional passwords to access certain data.DISCLAIMER: However, Financial Compound has no obligations related to our storing and usage of these records other than our obligation not to commit willful or intentional misconduct against you, as well as the storage requirements of the Department of Real Estate.
If you have any questions about this privacy policy, or removing your information from our database, please contact: Financial Compound, 1453 3rd Street, #325, Santa Monica, CA, 90401. 310-260-5900.
We are a general audience site, and do not direct any of our content specifically at children under 13 years of age. We understand and are committed to respecting the sensitive nature of children’s privacy online. If we learn or have reason to suspect that a user of our website or a newsletter subscriber is under age 13, we will remove their personal information from our system.
contact us
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1453 3rd Street, #325 Santa Monica, California 90401 DIRECTIONS & PARKING / VIEW MAP |
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directions and parking
We are located in Santa Monica on the third street promenade, on the corner of Broadway and Third, across the street from Santa Monica Place. From Interstate 10 head West and exit 5th street. It’s a shared exit for 4th and 5th streets. Turn right on 5th street. Turn left on Broadway, which is 2 blocks from the freeway exit. There are two main choices for parking.
(1) Park at our building:
The building provides valet parking. For validation, please call our office prior to arrival. From Broadway turn right into the alley between 4th and 3rd streets. Turn left into the first parking structure, which is underground. This is a one way alley heading north towards Santa Monica Boulevard.
(2) Park in the City lot on Broadway and Third:
On Broadway turn left into the parking structure between 4th and 3rd streets. Many guests like to park here as it offers the Promenade experience. Cross Broadway in front of Santa Monica Place and enter our building on the ground level in the corridor next to Desigual. This is a 3 hour free parking lot.
cutting edge loan terms
Updated: 10/25/2011
| PROPERTY TYPE | LOW LEVERAGE | FULL LEVERAGE |
|---|---|---|
| PROPERTY TYPE | LOW LEVERAGE | FULL LEVERAGE |
| Shopping Center | 3.80% | 6.5% |
| Office Building | 3.85% | 6.5% |
| Apartment | 3.25% | 4.6% |
| Industrial Building | 4.75% | 6.25% |
| Jumbo Home Loan | 3.2% | 4.25% |
| Owner User | 3.9% | 6.25% |
Here are cutting edge mortgage interest rate as of the above date for various property types and leverage amounts. These rates are generally for 5 to 10 year fixed rate loans. We also work with floating rate loans, shorter term loans, construction and land financing. Call us for more details as well as to obtain a quote for your specific transaction: