LEM Earmarks Up to $200 million to Buy Subordinate Debt and Renews its Focus on Mezzanine Loans and Preferred Equity

LEM Mezzanine, a direct provider of structured finance alternatives for real estate owners, announced that it has earmarked up to $200 million to purchase mezzanine loans and other subordinate debt positions and has renewed its focus on originating this product. LEM typically invests longer-term and on a fixed rate basis, but has also done many floating rate transactions. The company is also active providing preferred equity structures in transactions where the senior loan must be assumed and the borrower needs more leverage.

"We are open for business and want to help provide liquidity for holders of existing mezzanine loans", said Herb Miller, a founding partner of LEM. "Our equity base gives us liquidity to buy positions and to continue lending in this environment. Hopefully we can help senior lenders, brokers and borrowers get transactions closed during this tough period," added Miller. LEM still has over $200 million of equity to invest from the fund it raised last year.

"As first mortgage rates rise and loan proceeds fall, borrowers will need more mezzanine financing to complete their transactions, and LEM is gearing up to help fill that need," said Jay Eisner, a founding partner of LEM. "We also expect an increase in preferred equity requests since buyers may want to keep existing low-rate loans in place, and re-leverage their acquisitions with preferred equity." LEM uses the preferred equity structure in transactions where mezzanine financing is prohibited, usually because of restrictions in the existing first mortgage.

LEM can provide mezzanine financing behind CMBS, Fannie, Freddie, insurance companies, banks and other senior lenders.

LEM, a series of private equity funds with over $450 million of equity, provides mezzanine loans, preferred equity and B-Note financing from $1 million to $20 million and first mortgage bridge loans from $15 million to $75 million for commercial and multifamily properties nationwide. LEM writes larger deals if they involve a portfolio of assets or special situations. Loans are generally non-recourse for up to 90% of value with terms of up to 10 years.

LEM's principals include Ira Lubert, Jay Eisner and Herb Miller. LEM is part of Independence Capital Partners, a family of private investment management firms with over $6 billion of capital under management.