1. Financing Real Estate Deals in
Today’s Lending Environment
Interview with: Andrew Zeitman,
President, Quadrant
Given the current investment land-
scape, investors may not be able to
acquire new real estate or refinance
existing properties without subordinate
financing to bridge senior lender
proceeds to sponsor equity, according
to Andrew Zeitman, President, Quad-
rant.
Quadrant is a private lender at the
upcoming marcus evans Private
Wealth Management Summit June
2023 and the Private Wealth
Management Summit September
2023.
What are some of the challenges
facing owners and sponsors of
commercial real estate in the
prevailing lending environment?
How does Quadrant help sponsors
overcome those challenges?
Due to ongoing dislocation in the
capital markets along with higher
interest rates, commercial real estate
sponsors are having difficulty identify-
ing accretive financing to execute
acquisition and refinancing transac-
tions. Bank debt is constrained by debt
service coverage requirements and
higher interest rates have resulted in
reduced senior loan proceeds available
to borrowers resulting in more oppor-
tunities to provide subordinate capital.
Quadrant is an established provider of
subordinate capital, both mezzanine
debt and preferred equity, and re-
mains active in bridging available
mortgage debt proceeds to sponsor
equity to help facilitate transactions.
How has dislocation in the capital
markets affected deal flow, and
how have higher interest rates
affected pricing and expected
investor return?
Capital markets dislocation has
created a unique opportunity for
Quadrant. Without subordinate
financing to bridge a deal, sponsors
may not be able to acquire new or
refinance existing properties. Quad-
rant’s deal flow remains elevated
allowing us to underwrite only those
opportunities that present the highest
risk-adjusted return in exchange for
providing financing for high-quality
real estate and long-tenured sponsors
that have a demonstrated track record
of success.
As the Fed has raised rates over the
past 12 months, the yield on our debt
products has likewise increased.
Quadrant is earning an additional 300-
400 basis points for the same or less
risk with overall leverage continuing to
decline on new originations. Expected
returns are 13-18 percent on an
unlevered basis and before expenses.
What is the near- and medium-
term outlook for Quadrant’s
lending products and how long is
the runway?
With interest rate forecasted to remain
elevated for the remainder of 2023
and into the first part of 2024, we
continue to expect robust demand for
subordinate financing. The weighted
average maturity of the portfolio will
remain shorter overall at approximate-
ly 36-48 months as borrowers prefer
shorter-term debt with a plan to
refinance when interest rates are
lower. And with the bank dislocation
and a robust pipeline of executable
opportunities, Quadrant expects to
invest USD 150+ million into high
quality opportunities over the next 18-
24 months.
Higher interest
rates have
resulted in
reduced senior
loan proceeds
available to
borrowers
resulting
in more
opportunities
to provide
subordinate
capital

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About Quadrant
Quadrant Finance Partners is a Dallas-based private lender specializing in small balance (USD 3-12 million) mezzanine debt and
preferred equity secured by the cash flows of high quality commercial real estate properties located throughout the US. The
company was formed in 2016 and manages approximately USD 250 million across two closed-end funds and separately managed
accounts. Quadrant has developed an institutional-quality origination, servicing and asset management platform that underwrites,
invests, and manages its positions across all asset classes. Since inception, the fund has generated an average 10.6% annual cash-
on-cash return via quarterly distributions of net interest income. Quadrant is an RIA and registered with the SEC.
www.quadrantcapital.com/quadrant-finance-partners
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