About PILOT Real Estate Group - Acquisitions, Finance, Management

FLORIDA RESORT REPOSITIONING

PILOT originated a $3.5 MM first mortgage loan (the “Loan”) secured by a full service resort located on Florida’s west coast (the “Property”). The Property, historically successful, was over-leveraged before the recession and, as a result of degrading operating fundamentals, was operating at a loss and taken back as REO by its lender. In addition, the Property was in a state of disrepair, requiring major capital and operating improvements in order to return to profitability. The borrower purchased the Property with cash at an 84% discount to the prior owner’s basis and was seeking a loan to fund renovation costs. PILOT, seeing the future value of, and the borrower's commitment to, the Property, despite its position and condition, verbally committed to funding the Loan prior to the borrower's acquisition and upheld its commitment, closing the loan one week after acquisition.

RESULT: The borrower successfully executed the renovation and repositioning and repaid the Loan 15 months.

FLORIDA CONDOMINIUM RECAPITALIZATION

PILOT originated a $4.5MM first mortgage loan (the "Loan") used to fund the discounted payoff (DPO) of a note (the "Note") secured by 18 condominium units (the "Collateral Units") located in a multi-phase condominium development on the east coast of Florida. The borrower, a well-known real estate opportunity fund with limited remaining liquidity to invest in the acquisition of the Note, required capital and discretion. Due to the economic downturn and restrictive loan covenants of the Note, the borrower was unable to sell the Collateral Units at market clearing prices. The borrower’s business plan entailed using the Loan to execute a DPO and undertake an aggressive marketing initiative to dispose of the Collateral Units at market clearing prices under the Pilot Loan.

RESULT: The borrower successfully implemented its business plan and repaid the Loan 8 months.

MICHIGAN STUDENT HOUSING CONSTRUCTION

PILOT originated a $6.0 MM loan (the “Loan”) to a Michigan-based student housing developer and its pension fund partner to fund construction of a 144-bed student housing asset 5 blocks from the University of Michigan, Ann Arbor campus (the “Property”). Even with healthy University enrollment to support housing (~42,000 students) and a strong property location, the borrower unable to obtain financing from local or regional banks due to a tight lending environment. PILOT was able to consider the value of the collateral and the capabilities of the borrower and finance this successful project through a period of credit markets dislocation.

RESULT: The borrower completed construction and lease up and repaid the Loan in 19 months.

CORPORATE WORKING CAPITAL: REAL ESTATE OPPORTUNITY FUND

PILOT originated a $6.0MM corporate-level bridge loan (the “Loan”) to a New York City-based real estate opportunity fund (the “Fund”), to finance working capital, pay down debt obligations, and generate liquidity for one of its funds. The Loan was guaranteed by the Fund and secured by equity interests in two 1st mortgage positions held by the Fund. PILOT's certainty of execution and discretion were paramount to this transaction.

RESULT: The loan was paid off in less than two years leading to a successful result for both parties involved.

CORPORATE WORKING CAPITAL: STUDENT HOUSING OPERATOR

PILOT originated 2 separate corporate-level bridge loans totaling $6.5 MM (the “Loans”) to a national student housing operator to resolve near term liquidity obligations and provide corporate working capital for its 16-asset, 3,000-bed student housing portfolio. The loans were secured by (a) a preferred equity interest in the portfolio's most valuable asset (b) a corporate-level repayment guaranty by the operator, and (c) a personal guaranty by the operator’s CEO and Owner.

RESULT: Because of the additional liquidity, the borrower was able to stabilize and refinance properties in its portfolio and repay the Loan in 14 months.

GREENPOINT, BROOKLYN, OPTION

PILOT originated a six-month call option against a stalled development project located in Brooklyn, NY (the “Property”). The Property was being sold as REO by the former lender who took ownership of the property via foreclosure. Construction had been stalled for approximately five years. A prospective purchaser in contract to purchase the Property required funds to close within one week. Due to the short timeframe and without an opportunity to perform in-depth due diligence, PILOT purchased the Property and sold the prospective purchaser a six month repurchase option. Within the required timeframe, PILOT assumed the purchase contract, closed on the Property, and the repurchase option to the prospective purchaser. PILOT's creativity in structuring this transaction mitigated the risk of operating within a compressed timeframe and gave the optionee economics similar to a debt transaction.

RESULT: The optionee was able to recapitalize the Property with bank debt and exercise its purchase option within 7 months.

PARK SLOPE, BROOKLYN BOUTIQUE CONDOMINIUM REDEVELOPMENT

PILOT purchased a vacant 8,150 gross square foot Landmarked building in a prime location on Prospect Park West in the Park Slope neighborhood of Brooklyn, NY (the “Property”). PILOT had previously unsuccessfully bid on the Property in an earlier round of marketing but had the opportunity acquire the asset subsequently, as the previous contract holder could not perform. The plan for the building was to renovate/redevelop the Property into a 5 unit condominium building with each unit having outdoor space.

MIDTOWN MANHATTAN BOUTIQUE CONDOMINIUM DEVELOPMENT

PILOT purchased an existing 7,510 gross square foot, 4-story, single-tenant building in the Clinton/Hell’s Kitchen neighborhood (the "Property") from a seller who occupied the entire building and was relocating its operations to New Jersey. The terms of the purchase included a leaseback of the Property to the Seller for an additional seven (7) months post-closing. With air rights available as-of-right to the Property, the site comprises a potential maximum gross floor area of approximately 12,000 SF. PILOT is converting the building from commercial to residential use, adding additional floors, and developing a 7-story, 6-unit high-end boutique condo development.

BROOKLYN TOWNHOUSE DEVELOPMENT

PILOT purchased the fee-interest in two adjacent parcels of land located in Fort Greene, Brooklyn (the “Property”). The Property is a corner 25x100 lot that is treated as one tax lot. The business plan includes subdividing the lot into two lots, upon which two fee simple townhomes can be built. The townhomes will each consist of 5 bedrooms, three full and two half bathrooms, and together comprise a total of 6,650 rentable square feet. Fort Greene is a designated Historic District, and as such, PILOT has received design approval from the New York City Landmarks Preservation Commission (LPC) and is developing a project that blends with the historic brownstone fabric of the neighborhood.

BROOKLYN DEVELOPMENT SITE ACQUISITION

PILOT purchased a 3,450 GSF, 100% occupied, single-story retail building in the Boreum Hill section of Brooklyn (the “Property”). As-of-right, the 61’ x 65’ corner Property can be developed to a maximum floor area (FAR) of 15,785 SF ($162/FAR SF). PILOT, with a JV partner, worked with Seller to procure estoppels and extend the retail leases through the end of 2014 while procuring development approvals. Current tenant operating income of $80M/year yields 3% on total current capitalization, helping to offset carrying costs during the assemblage and approval process. In addition, PILOT is purchasing 4,043 SF of neighboring air rights for $324,000 ($80/SF), resulting in a total development site of 19,828 FAR SF ($145/FAR SF). PILOT plans to develop a 23-unit residential building with 1st floor retail at a total development cost of $11.0MM ($553/FAR SF).

CHICAGO STALLED CONDOMINIUM CONVERSION

PILOT acquired a 33-unit, partially completed, stalled condo conversion (the "Property") in Chicago, IL through a short sale. The building was structurally sound and required capital to complete construction. PILOT's business plan entailed completing construction, leasing the units, and operating building as a rental property. The existing lender required execution within one week and PILOT was able to meet this requirement, closing on the acquisition in a few days.

RESULT: PILOT successfully completed construction, stabilized the building, and sold the Property in less than 20 months from acquisition.

NORTH CHICAGO MULTIFAMILY SHORT SALE ACQUISITION

PILOT purchased 7 out of 8 condominium units (the "Property") through a short sale, in a partially completed condo conversion located in an affluent northern suburb of Chicago, IL. PILOT's business plan included completing construction, potentially buying the last remaining condominium unit, and leasing the units. Through PILOT's extensive network, it was able to source this off-market transaction at such a basis as to generate above market yields.

RESULT: PILOT completed construction and leaseup and successfully sold the Property less than 27 months after acquisition

WEST LOOP CHICAGO CONDOMINIUM REPOSITIONING

PILOT acquired the top two penthouse floors (the "Property") in an existing condominium development in a prime location in Chicago. At the time of acquisition, the penthouses, with views of the Chicago skyline, were in a raw condition, left by the original developer since the property was constructed in 2003. PILOT's business plan included designing and building out the new penthouse units, then reevaluating whether to hold the Property as a rental or sell individually as condominium units. This acquisition is a prime example of PILOT's ability to recognize value and to consummate a transaction.

NAPLES, FLORIDA SINGLE FAMILY HOME DEVELOPMENT

PILOT entered an option contract to acquire the fee interest in a multifamily zoned lot in Naples, FL (the “Property”). The infill Property was situated in an affluent neighborhood of Naples and located approximately four blocks from the beach and one block from “Main” street. Between the time of the option contract execution and exercising the option, PILOT reduced the risk of the transaction and increased the value of the Property by securing a rezoning of the lot, subdividing the lot, drafting plans, obtaining necessary permits and approvals required to construct four fee simple single family homes, procured construction financing, and vacated the Property's existing structure.

RESULT: PILOT completed the phased, four-home construction development in 25 months, selling all units at or above asking prices.

NORTH CAROLINA STUDENT HOUSING VALUE ADD

PILOT acquired a 32 acre, 223 unit/682 bed off-campus student housing asset (the “Property”) adjacent to a 10,500-student, 4-year university in North Carolina through a short sale. At closing, the Property was 52% occupied, generally due to poor property management and capital investment at the Property. As a result, the asset's market value was well below its long term economic value. 

RESULT: PILOT streamlined operations, repositioned the Property, significantly increased NOI, and sold the Property in less than 3 years after acquisition.

FLORIDA INDUSTRIAL WAREHOUSE PORTFOLIO

PILOT acquired a distressed, 58% occupied, 6-property, 360,000 SF, warehouse/flex portfolio in Fort Myers, FL (the “Portfolio), as part of a programmatic joint venture with a sponsor and a best-in-class property manager. PILOT’s business plan entailed completing a programmatic capital improvement and lease-up program, and stabilizing the Portfolio through decreasing vacancy and elevating the credit profile of its tenants. PILOT continues to actively acquire well-located assets and implement a controlled leasing strategy.

TOUHY

PILOT acquired a 33-unit, 60% complete, stalled condo conversion in Chicago, IL through a short sale. The building was structurally sound and required capital to complete construction. PILOT's business plan entailed completing construction, stabilizing the building as a rental property, and reevaluating whether to refinance and hold or to sell.