High Yield Loans
High Yield Loans
Through its extensive connections and experience in real estate markets, Pacifica started a partnership to identify and fund loans secured by real property. These loans provide Pacifica a higher yield alternative to the returns available in money markets and certificates of deposit (“CDs”). Pacifica’s cautious investment philosophy remains consistent when applied with these loans: focus on market funds and product types Pacifica knows well and where there is a high margin of safety. Loan to value ratios usually range between 40% to 70% of appraised or market value with loan terms of six to 30 months. These loans, in turn, serve as an alternative funding source to borrowers who cannot, or choose to not to, secure financing for their real estate projects from traditional institutional lenders.
Pacifica has often leveraged the loans with institutional debt at lower rates, often with personal guarantees by key members of Pacifica.
Markets & Product Types
Pacifica concentrates on local markets and product types with which its principals and/or local partners have experience. That translates into a focus primarily on Southern California, and in Colorado, the Denver Metro Area and Western Slope of the Rocky Mountains. Our affiliates also have experience in Southern Nevada and in Gateway Cities along the West Coast. The product types similarly are within our areas of expertise: industrial, R&D, office, retail, multi-family, and certain residential developments, including single family ones and senior living facilities.
Borrowers typically pay interest at annual rates in the high single- to low double-digit range. Loans are typically variable rate Our loan selection process places safety above yield. We often employ leverage through unsecured bank debt that increases yields up to 25% from stated rates. The loans are often “pooled” for diversification to minimize risk.