A Matchmaker for Developers, Lenders, and Investors
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Mitchell Draizin is a matchmaker and a tailor.
“I bring real estate developers together with lenders and equity investors,” the founder and president of Longview Capital Advisors said yesterday.”My focus is on structuring and obtaining the equity and the debt financing from conventional institutional sources. I create joint ventures between my clients and experienced developers. Matchmakers and tailors share two things – they both deal with people, and they make the fit work.”
Before the fit can become meaningful, however, the parties have to negotiate approvals from city agencies and community groups. Once that’s accomplished, the financing must be structured and obtained. That’s where Mr. Draizin comes in.
“There’s a host of programs and financing sources out there,” he said. “It’s time-consuming – and expensive – for borrowers to try to navigate this on their own. I know what’s out there. After determining my clients’ needs, I put together a customized financing request and then introduce them to targeted financing sources. I also direct the negotiations and closing processing.”
He established his privately held company in 2000, after two decades in investment banking and financial services. Mr. Draizin has largely focused on the financing of development of industrial, multifamily, and retail facilities in Upper Manhattan and the outer boroughs.
“These areas are in transition or ripe for economic development,” he said. “But they haven’t attracted experienced developers because traditionally they haven’t been able to get financing for these mostly moderate-income neighborhoods.”
Financing for construction typically comes from lending institutions. But these tend to be risk-averse, especially when it comes to transitional neighborhoods. Moreover, many would-be borrowers from such neighborhoods – Washington Heights, for example – tend not to have working knowledge of how to work the banking system.
“Many borrowers indigenous to these communities are reluctant to go to banks,” Mr. Draizin said. “They often find themselves with band-aid solutions. Sometimes they go to money lenders who extract hard terms – high interest rates and tough repayment schedules.
“So one part of my work involves straight financial advisory work – structuring loans and equity investments for existing and new real estate. But I also identify joint-venture partners for my clients,” he said. “And I then proceed to handle the negotiations that lead to the right fit. I don’t look for deals. I look for clients, for long-term relationships.”
Those relationships have proved lucrative. The smallest of his projects, for instance, was a $3 million mixed-use complex in Brooklyn. Also in Brooklyn, another client, PDS Development Corporation, bought a portfolio of three industrial properties totaling 500,000 square feet, for $52 million. Mr. Draizin negotiated the debt and equity in such a way that it enabled PDS to minimize its equity contribution.
Mr. Draizin created the financial template for the Blue condominiums that are being built in Manhattan’s Lower East Side, a project that’s expected to cost $35 million. He organized the conventional and mezzanine, or additional, debt financing, as well as the outside equity which allowed his client, On the Level Enterprises, to maximize leverage on its equity contribution.
The fact that Mr. Draizin has been able to put together financial and other elements for such deals bears testimony to the impact he made with his first project immediately after launching Longview Capital Advisors.
The project involved a 303,000-square-foot retail development at Broadway and West 225th Street in the Bronx. It was occupied by derelict buildings, for the most part, and a few car-repair shops. Eight separate properties were consolidated by Mr. Draizin’s client, Kingsbridge Associates, and the total development project cost $50 million.
The consolidation – for which Mr. Draizin arranged the financing – sparked a revitalization of the neighborhood. A large shopping center, Riverdale Plaza, was developed on the site. Brand-name shopping outlets such as Target, Marshall’s, Payless, and Appleby’s moved in. So did Citibank.
Mr. Draizin has completed financing for more than 40 residential, commercial, and industrial projects since Riverdale Plaza. Last year, among his accomplishments was a series of three joint ventures for a 300-unit affordable housing complex and a 30,000-squarefoot ground-floor retail and commercial space in Upper Manhattan.
Before he undertakes any project, he asks a fundamental question: “How is this going to benefit the community?”
The question dates back to his early years in the Long Island community of Roslyn. Mr. Draizin was an activist in his high school. During his undergraduate years at George Washington University, and later when he went to Vanderbilt University to obtain an MBA,he sustained his love for politics.
“I would always say to myself, ‘How am I going to make things happen so that the greatest number of people could benefit?'” Mr. Draizin said.
He got an opportunity to apply the question in the international arena when he joined what was then called Commerce Union Bank. He acquired financing and negotiating skills and a reputation on the real estate side of investment banking.
Mr. Draizin also developed a reputation for what he calls “financial entrepreneurship.”
That involved conduit lending, creating a program for small commercial loans between $250,000 and $2 million. It proved popular. He generated financing and development for industrial parks and multiuse and retail complexes in Connecticut and Long Island.
What led to the creation of Longview Capital? “I like the business of economic development,” Mr. Draizin said. “But I didn’t want to go into government or work in a nonprofit organization. Being unaffiliated gives me the freedom to do what I think is right, not sell what I’m paid to sell.”
But entrepreneurs sometimes act impulsively based on unrealistic assumptions, he said. “In the real estate business, you’ve got to stick to the fundamentals,” Mr. Draizin said. “That means a common sense approach to the economics of supply and demand. There are two things that you cannot control: the market and politics. A sensible entrepreneur needs to be aware of the realities on the ground.You can’t let your head be in the clouds. I’m amazed how many people ignore this fundamental principle.”