Envoy Net Lease Partners, a Chicago-based capital provider to the net lease real estate sector, announced the formation of a joint venture with a global private equity firm. The new joint venture is one of the few that involves an institutional investor making a capital commitment to the high-leverage build-to-suit construction lending market, a specialty financing niche that provides up to 100 percent loan-to-cost construction financing for single-tenant net lease properties.
“By partnering with an institutional investor, Envoy now has ample capital to fund large development pipelines of commercial, industrial and office properties nationwide,” said Ralph N. Cram, CFA, president of Envoy. “The joint venture’s focus on unitranche lending—which provides a single capital source to accommodate virtually all of a borrower’s capital needs—is the most efficient and cost-effective way for developers and tenants to finance their multi-property pipelines.”
Net lease is one of the fastest-growing segments in commercial real estate. With this new joint venture, Envoy can offer lower cost debt financing in the build-to-suit construction lending niche, especially for projects leased to investment-grade tenants. The name of the joint venture partner was not disclosed.
Under the terms of the joint venture, Envoy will seek to finance the development of multiple single-tenant, net lease properties at the same time for a single borrower, up to $20 million per property. Envoy expects to originate over $200 million of build-to-suit construction loans in the next two years. An established player in the niche, Envoy was selected as a partner based on Envoy’s track record, expertise and in-place infrastructure, as well as its reputation as an established, best-in-class player in the net lease segment.