TFP

Overview

TFP excels in sourcing, negotiating, and closing capital transactions. We finance through traditional banks, secondary off-market sources, mezzanine lenders, private equity institutional capital partners, and other non-traditional sources. A specific financial solution is developed for each situation and incorporated into post-closing projections for the client to review.
 

Services

• Assessment of Financial Condition

• Financial Modeling

• Debt Financings - Secured, Unsecured, Hybrid & Mezzanine

• Equity Capital Raises & Joint Ventures
   

Process

The process begins with a thorough assessment of the client’s current financial position including: a) cash flow analysis and projections, b) review of all major terms and status of existing debt instruments and equity tranches and c) any unfunded contractual obligations. Depending upon the results of this assessment and incorporating the future cash flow projections from current operations and/or growth requirements , we are able to determine the size and timing of the client’s capital requirements.
 

Capital Sources

Capital requirements can be funded by: a) procuring new or replacement debt, b) raising new equity capital, c) selling assets or d) combining some or all of these techniques. The selection of the optimal source of funding is a function of:

• the intended use of funds,
• the company’s ability to repay any incremental or refinanced debt over future timelines using variable and fixed assumptions for interest costs and amortization schedules,
• the capacity for secured/unsecured debt currently available (as impacted by the use of the new funds and as may be limited by existing loan covenants and expected new loan conditions),
• the potential personal guarantees both existing and as may be required by new lenders and
• the risk profile of the company, its industry and market conditions, etc.

Debt Financings

For conventional financings TFP will use its commercial banking relationships to source short to mid-term loans. Rates and terms are generally attractive, however for closely held private companies the bank will most likely require collateral and personal guarantees of the principals.

For more highly leveraged situations we will approach high yield debt funds and mezzanine lenders. These sources will expect significantly higher yields, possibly with participations, but underwriting standards (e.g. loan to values up to 80%+ and minimal debt service coverage ratios), will be more relaxed with the possibility of only partial personal guarantees. Values and marketability of underlying security and collateral are of greater import. Intermediate term loans of 3 to 5 years are available, but loan fees will be higher than commercial banks.
 

Equity Capital

The process of identifying, negotiating and closing joint ventures, or debt convertible into equity, takes substantially greater effort and time. Most investors are looking for yields in the mid to upper teens. Except for situations involving raw land, these yields are generally only achievable if senior debt is available to increase leverage and yield. Generally, before a potential equity investor  conducts serious due diligence, they will require that strong letters of interest, if not conditional loan commitment letters, have been obtained thereby ensuring that leverage is committed. Private equity funds and advisors to pension and life company sources generally look at larger funding opportunities with a minimum size of $10 to $25 million and investment horizons of 3 to 7 years.
 

Representative Transactions

High Rise Hotel Project

Funding of $125 million was required for the first phase of a major hotel project in SoCal. The developer had minimal capital available after pre-construction expenditures. Equity of $30 million (24% of costs) was funded by a intermediate term commercial bank loan which was secured by two Letters of Credit of $15 million each which were provided by a Swiss based investor and an entrepreneurial financial institution in SoCal. Once the equity capital was committed, a $95 million traditional construction loan was obtained from a money center bank.

Build-to-Suit Corporate Headquarters - with intensive security requirements

A 110,000 sq. ft. HQ/Office/Lab with high level internal security requirements was developed under a long term NNN lease arrangement. The tenant provided a 12 month lease deposit equal to 5% of the project costs due to the high cost and uniqueness of the specialty improvements. The developer formed a partnership with the majority owners of the tenant entity with all partners making a capital investment equal to 5% of the total project costs. The remaining 90% of the capital was provided by a construction loan convertible into an five year term loan.