Dallas Business Journal
Dallas developer Craig Hall knows a thing or two about financing developments and construction projects. And, with that experience, Hall formed a lending division of Hall Group about two decades ago that has been putting equity into developers’ hands.
“We started our lending program by word of mouth, or people that knew of Craig and the program, but what we do today is provide financing mainly to developers across the nation looking for construction financing, major adaptive reuse financing or more cash flow,” said Mike Jaynes, president of Dallas-based Hall Structured Finance.
“We really leverage off Hall as a parent company and we are able to look at real estate from a different perspective than most lenders,” he added. “Because we are independent and not regulated, we are able to meet the needs of some particular projects.”
Hall Structured Finance typically lends $9 million to $50 million loans on developments throughout the United States. In all, the firm has a $175 million book of business, with plans to add another $200 million by the end of the year.
The book of business sits on Hall Group’s balance sheet, which has a low levered rate of 40 percent to 50 percent, he said.
Jaynes said he expects the division to continuing growing its business, with loans also growing over the past several years. About five years ago, Hall Structured Finance typically lent an average of $6 million to $20 million, which has grown to an average of $20 million to $40 million.
Specifically, Hall takes a contrarian investment strategy, with a tendency to lend in markets that are seeing some distress, such as Houston.
“With the oil and gas industry, Houston has had some real issues lately, but we are bullish on Houston long term,” he said.
Jaynes chats with the Dallas Business Journal about his plans for the division:
Why did Craig Hall decide to start this financing arm?
After Sept. 11th, we saw a need for a source of construction financing, which spring boarded us into hotel financing. About 12 months ago, we decided to really grow the business. This is a nice, steady business that compliments the other businesses under the Hall Group umbrella. All of our financing is commercial real estate related. When we decided to get into the lending business we wanted to do it in a way that was prudent to us and we said, ‘Why don’t we take our real estate and financial engineering expertise and finance projects for other people.’ It was Craig’s vision. In a developer’s shoes, it can be difficult to land financing.
What do you like to lend on at Hall Structured Finance?
We like to finance good quality real estate. Based on our yield and return requirements, we’d rather finance a brand new hotel compared with a Class B or Class C quality office building. We are heavily involved in financing hotels.
Where do you see the structured finance division headed?
We are looking to expand the business. We have a heavy appetite for new opportunities in Houston, which is a market we don’t shy away from and would like to dive into. Because we are a private lender, we have a dedicated process from origination to close to asset management to everything. We are not closing loans and spinning them off and selling them.
Original Article: http://www.bizjournals.com/dallas/news/2016/08/22/…