Arixa Capital Named One of the "Most Influential Lenders in L.A. County" by the Los Angeles Business Journal

Arixa Capital Named One of the "Most Influential Lenders in L.A. County" by the Los Angeles Business Journal

Growing your business fiscally and physically can be one of the most challenging things for a business owner to go through. The Los Angeles Business Journal mentions Jan Brzeski, Managing Director & Chief Investment Officer of Arixa Capital as one of the most influential lenders financing the opportunities in redeveloping and rebuilding the World War II-era style homes across California.

How Levered Lending Funds Differ From Unlevered Lending Funds

Illustration with Two Funds

Suppose there are two funds, each making loans at 75% of cost which works out to 60% of after-repair value. Each fund has 50 loans of $1 million each. One (unlevered) fund has $50 million of investor capital and no bank debt. The other (levered) fund has $40 million of investor capital and $10 million of bank debt. 

Both funds hold loans on property whose gross value upon sale is $83 million ($50/.6). Assuming that the market is flat, increasing gradually or decreasing gradually, the levered fund will have higher returns than the unlevered fund. Assuming that loans earn a 9% yield and the bank debt costs 5%, there would be a spread of 4% on the $10 million of bank leverage, adding $400,000/yr of income. This extra income is spread across $40 million of investor capital, equating to an increase in return of 1% per year over an unlevered fund, all other things being equal.

Stress Testing Both Funds

But suppose that the real estate market drops dramatically so that every loan goes into foreclosure and each fund only recovers $45 million total, of the $50 million invested in loans. This equates to a market drop of more than 40%.

In the unlevered fund, each investor would lose 10% of his or her investment (a loss of $5 million/$50 million). In the levered fund, the loss would be $5 million/$40 million = 12.5% of principal. In other words, the bank leverage helps returns in normal times but it exacerbates losses in the unlikely event of a steep decline in the market that is large enough to wipe out the substantial margin of safety in this strategy. 

Note that the bank leverage is not changing the size of the margin of safety itself--both funds make loans with the same 75% LTV/60% loan-to-after repair value of the homes. It just changes what happens if this 40% margin of safety is breached.

EARLY BIRD Tickets Are On Sale Now for Investing Amidst Uncertainty

EARLY BIRD Tickets Are On Sale Now for Investing Amidst Uncertainty

Please join us for Investing Amidst Uncertainty the 11th Annual UCLA Real Estate Symposium on April 26, 2017 at 6:30 p.m. for a reception and panel discussion with some of Southern California’s most established real estate investors.  EARLY BIRD TICKETS ARE ON SALE NOW!

Arixa Capital Offers a Commercial Lending Program

Arixa Capital is a private commercial real estate lender specializing in acquisition financing, renovation, and construction loans.  Founded in 2006, Arixa has made over $400 Million in real estate loans.

We provide senior and mezzanine financing solutions for experienced borrowers throughout California.  Financing major commercial asset classes, we value our borrower relationships and appreciate the unique circumstances of each loan, striving to provide certainty of execution and speed to our clients.

Check out the latest article, Mind the Gap!

Check out the latest article, Mind the Gap!

Wealthy investors have a long tradition of putting their money to work in real estate, although
historically it has been in the hard asset itself. Now however, investors are gaining interest in the
lending segment of private real estate investing, by lending to developers who focus on building or
renovating high-end properties. This article drills into developments around the new ways that
investors are seeking to tap into real estate markets.

Lending on Single-Family Homes for Income

Lending on Single-Family Homes for Income

In the second episode of our webinar series, we interview Greg Hebner, co-portfolio manager of Arixa Capital's real estate lending funds. Greg explains an investment strategy that is uncorrelated to the public markets; generates very attractive monthly income; and features a significant margin of safety in case the real estate market turns down. In the interview we will probe this strategy in detail to identify the risks and see how Arixa mitigates those risks.

Liquid Home-Building Funds Offered - Hedge Fund Alert

Liquid Home-Building Funds Offered - Hedge Fund Alert

A Los Angeles investment firm is seeking to raise a combined $100 million for two funds that provide short-term construction loans to builders of single-family home projects.

Arixa Capital is targeting high-net-worth individuals, family offices and other types of investors in its capital-raising drive. Arixa’s founder, Jan Brzeski, hopes to raise the bulk of the targeted $100 million by the end of 2017. 

Satisfying the Need for Speed - Scotsman Guide

Satisfying the Need for Speed - Scotsman Guide

A popular video game, “Need for Speed,” features go-fast cars that cost more than the average automobile. Bridge loans for homebuyers are similar in concept. They cost more than traditional financing, but sometimes it’s worth paying a premium for speed.

In addition, bridge loans can solve problems for homebuyers, mortgage brokers and Realtors. They can provide financing exactly when and where it is needed, without the complexities and time required to close on a conventional loan.

Beyond Wall Street Webinar Series

Beyond Wall Street Webinar Series

Please join us for a monthly webinar educational series for investors seeking new and better alternatives to mainstream investment options.  Each call will last 30 minutes and a replay will be posted on the website and emailed out to the attendees.  The webinar takes place on the second Wednesday of each month.  

Frequently Asked Questions, Wealth and Income: Bridging the Gap

Frequently Asked Questions, Wealth and Income: Bridging the Gap

Based on Arixa Capital’s September 14, 2016 webinar series: an interview with Don Plotsky, private investor and featured guest speaker. Don Plotsky has 32 years of experience in the bond markets, starting as a portfolio manager on mortgage-backed and other structured securities. During his career at Western Asset Management, he worked closely with investors to help them define both their investment objectives and solutions — for mostly large institutional investors.

How the Urban Renaissance in Gateway Cities Creates Opportunities for Savvy Investors – White Paper

How the Urban Renaissance in Gateway Cities Creates Opportunities for Savvy Investors – White Paper

The best jobs are increasingly located in the largest city centers rather than in the suburbs. Young professionals are increasingly choosing to live in centrally located urban neighborhoods for a number of reasons: improved safety, access to parks and cultural institutions, and decreased reliance on cars and long freeway commutes in favor of public transit and walkability.