- Face Amount: $250M
- Debt Position: Senior & Mezz
- Partner: King Street
BH3 Debt Investment | 125 Greenwich, New York, NY
BH3 Management has been an active investor in opportunistic credit and distressed debt since 2009.
Founded amid the 2008 financial crisis, BH3 has a strong track record of sourcing, acquiring, and managing highly complex distressed situations. BH3’s investment team has extensive experience managing both performing loans and non-performing distressed loans. This experience includes overseeing borrower relationships, complex litigation, capital markets, sales, and ongoing asset management. The team utilizes an established network of third-party relationships as well as internal resources to ensure execution of our investment strategy when the right opportunity is presented.
- Acquired the NPL at a $625 per square foot basis (“psf”) which offered a compelling opportunity whereby the position was the most senior position of the capital stack at a basis of approximately $200 million with approximately $600 million spent to date on the project
- Throughout the course of the investment, BH3 proceeded with the foreclosure actions against the borrower while also funding and managing the general contractor to ensure the building was safely secured and protected from environmental damage
- The opportunity signified another successful NPL investment for the Firm and a strong return for all investors over the hold period of the investment
- Acquisition Date: July 2019
- Exit Date: Feb. 2020
- Acquired the performing leasehold mortgage secured by the to-be-completed 287-key ACE hotel Brooklyn at a compelling basis of approximately $175,000 per key
- The property was approximately 94% complete at the time of acquisition thus mitigating construction risk
- The revised capital stack, which included fresh equity contributions from an institutional investor, further provided comfort in the transaction as the last dollar exposure from a loan to cost perspective was approximately 55%
- The acquisition enabled BH3 to successfully expand on the investment thesis of selectively purchasing performing loans post-origination.
- Despite only being outstanding for less than one (1) year, the investment generated a healthy return while paying investors current monthly distributions.
1The acquisition of the note was capitalized through a co-invest offering, an investment from BDOF I, and a JV partnership with a strategic hotel operator.
- In November 2009, BH3 acquired the senior debt on a stalled, 65% complete condo development project in Miami Beach, FL
- BH3 spent time understanding the nuances of the deal and actively negotiated 81 of the 83 mechanics liens prior to closing
- BH3 acquired the defaulted debt for $17 million and was able to successfully execute the property recapture, construction completion and disposition within 2 years of the initial acquisition
- As BH3’s first transaction as a firm, MSD Capital (Michael Dell’s family office) became BH3’s joint-venture partner providing the equity for the transaction.
- BH3 reengaged the developers, contractors, and subcontractors to complete the balance of the work. This was achieved by amicably working with the borrower and by keeping all parties on board throughout completion.
- BH3 executed through acquisition and clearing title issues, managing, and executing all construction completion, and executing the successful sellout of the Project
- BH3 managed the board from the time of purchase until ultimately turning it over in late 2011.
ICON LAS OLAS
- In June 2019, BH3 Icon acquired a 48.6% interest in Icon Las Olas at a $209.5 million valuation alongside The Related Group, the original developer of the property
- The property was held and operated as a multifamily investment for approximately two and a half years before being sold to Rockpoint Group in January 2022 at a valuation of $253 million
- The investment utilized an acquisition structure that bought into The Related Group’s membership interest so as not to reset the property taxes, and thereby saved over $2 million in property tax expense