Securities-based fractional funding available for buyers and developers
A new US company, Securities Based Fractional Funding, LLC.(SBFF) has teamed up with Equities First Holdings, LLC. (EFH) to provide securities-based financing to domestic and foreign buyers, owners and developers of luxury fractional properties.
SBFF is the brainchild of David M. Disick, private residence club pioneer and fractional finance expert, while EFH is a direct lender specialising in securities-based lending to investors worldwide, who are in need of prompt funding. SBFF will be the exclusive worldwide fractional lending representative for EFH.
SBFF founder David Disick is a former Wall St attorney and a pioneer of the private residence club sector
Steve Gordon, SBFF partner, said that today’s fractional investor requires a product that fills the gap created by the credit crunch. Lending against the borrower’s securities portfolio eliminates those gaps and provides many other unique financing advantages over a traditional mortgage, margin loan, cash such as:
• 100% non-recourse
• Below-market, fixed rate loans ranging from 2.5% to 4.5%. Rates are based on the performance of the security.
• Quarterly interest-only payments which are offset by any declared interest/dividend.
• Borrower retains all beneficial interest in pledged securities.
• Loan to securities values ranging from 35% up to 80%. The more liquid and actively traded, the higher the ltv.
• No Appraisals, Credit reports or Project Approvals.
• Not income or credit driven.
• No maximum loan amount (US$100k min.)
• Simple application process; consists only of a review of the most recent portfolio statement(s).
SBFF says that despite the credit crunch, and while access to liquidity through traditional capital markets is difficult, its loan enables borrowers to obtain funding at below-market rates by pledging the securities they own, under a collateralized re-purchase agreement, as collateral for the loan.
Eligible securities are publicly traded stocks, bonds, tradable mutual funds, unit investment and real estate investment trusts as well as foreign positions on certain international exchanges. Ineligible securities include privately held stocks and securities held in retirement accounts.
Successful stock-lending transactions have been executed involving the American Stock Exchange, NASDAQ National Stock Market, NASDAQ Small-Cap Stock Market, New York Stock Exchange, Over-the-Counter Bulletin Board and certain foreign exchanges.
SBFF is a specialised fractional financing and consulting firm. David Disick, a former wall street attorney, was recently named by Fractional Life to its list of The Top 21 Fractional Real Estate Professionals of 2010. Steve Gordon has been originating mortgages for 30 years and was most recently the founder of Carteret Mortgage Corporation’s Fractional mortgage division.