Lee Kotler, president of Chicago-based Konnect Real Estate, announced that his firm has launched a privately held real estate debt fund, KNCT Lending, LLC (“KNCT”), focusing on short-term and transitional capital. The fund’s goals are to provide real estate owners and operators with flexible, creative and reliable short-term lending solutions as well as accelerated term sheets and approvals. The fund will also offer low loan minimums ranging from $250,000 to $3 million and more flexible underwriting guidelines.
Kotler, the fund’s manager, said his experience as a local real estate investor and operator gives the fund and its borrowers a strategic advantage in understanding transactions that may involve complex turnarounds, re-positioning, re-tenanting or environmental issues and subsequent exit strategies.
“We wanted to create a platform to provide capital in an area where other lenders aren’t necessarily comfortable with the myriad of complexities that can come up in commercial real estate transactions, especially on loans of less than $3 million,” Kotler said. “Whether its a timing issue or a problem that needs to be solved and structured around, we have the experience and creativity to work to an accretive solution for our borrowers, in order to get their property to the next phase, whether that is getting it acquired, positioned for sale or permanent debt.”
The fund’s most recent transaction was a loan for a tenant to purchase the industrial building they were renting in the northern suburbs of Chicago. The $1.8 million loan was for a one-year term with an option to extend if needed and prepayment flexibility.
“There was a timing issue in regard to a quick closing and some other complexities other lenders could not get comfortable with. We closed the deal in 30 days and the borrowers now own the property and are well positioned to seek more permanent debt,” said Kotler.