BEVERLY HILLS, CA—While many real estate investment firms boast about the numbers, Sonnenblick-Eichner Company prides itself on being boutique and delivering personalized service to each and every one of its clients—which it considers the key to its success.
“The current state of Sonnenblick-Eichner Company is extremely busy given the tremendous amount of liquidity in the market for debt and equity,” said David N. Sonnenblick, co-founder and principal of Sonnenblick-Eichner Company. “We continue to focus on our core business of representing owners of institutional property in raising debt and equity capital.”
For the company, personalized service is key to representing those owners. “What makes us different from our competitors is that when a firm hires Sonnenblick-Eichner Company, a principal of our firm is personally involved with each transaction,” said Elliot K. Eichner, co-founder and principal of Sonnenblick-Eichner Company. “We do not believe there is another real estate investment banking firm that provides the hands-on transactional experience from the people who are actually marketing, negotiating and closing each transaction that [the firm]brings to each deal.” This is one of the reasons why the company believes clients keep returning to the firm for advice.
The co-founders have been working together for more than 30 years; Patrick Brown, the firm’s third partner, has been working with the pair for more than 25 years. “This allows us to easily control the corporate culture within our firm and maintain the ethical standards that we expect from ourselves and that our clients and institutional lenders demand from us,” Sonnenblick said.
It’s this familiarity with each other that enables them to deliver on this service. “Being a boutique real estate investment banking firm results in an intimate working environment, allowing everyone within our firm to know about the intricacies of every deal that we are working on,” he said. “We work as a team on every transaction, bringing our combined knowledge to each deal on behalf of our clients.”
The firm’s services include debt financing, equity and sales; however, most of Sonnenblick-Eichner Company’s historical transactions have been debt placements for existing properties. It also raises funds for and executes joint venture equity, mezzanine and preferred equity. “Our clientele sees the value that we bring in providing the best structure and pricing for their permanent, construction and interim loans,” Eichner said. “Our clients know when they hire our firm they are getting the best execution in the marketplace and, consequently, we get a lot of repeat business.
“We would look forward to expanding our business into other areas of real estate finance, but not at the detriment of taking care of our existing clientele,” he said. “We have considered expanding our presence from just one office in Beverly Hills to other offices, but haven’t found the proper team yet.”
The firm’s portfolio is divided into hotels and resorts; retail and multifamily; and office and industrial. The majority of the firm’s business has been in arranging debt and equity for hotels and resorts, mainly “due to the nuances associated with financing hospitality product” that isn’t associated with other types of real estate, Sonnenblick said.
“As a result of this, we continue to get a tremendous amount of requests to finance hotels and resorts on behalf of our clients, and we consequently have carved out a niche for ourselves in arranging financing for the hospitality sector,” he said.
Sonnenblick-Eichner Company’s average size deal is between $50 million and $75 million. “Since the partners of our firm personally work on each transaction, we must be selective on the transactions that we work on to make sure we are successful in our execution,” Eichner said. “We always ask ourselves before taking on a deal, who the logical lenders and/or investors are for this transaction and if it’s executable in today’s capital markets environment. By doing this, we provide some certainty to our clients as to what they should expect from our marketing efforts in today’s market.”
The firm negotiates many transactions between $20 million and $50 million, but it also works on financing assignments in excess of $100 million. “When sitting down with Sonnenblick-Eichner Company for the first time, potential clients generally like to hear from us what we are seeing in the capital markets for real estate finance,” he said. “They like to hear about our expertise, transactions we have completed and what we are seeing in the marketplace from different capital sources as it may relate to the types of financing available for their asset.”
Typically, two partners from the firm will sit down with a client the first time they meet. “First meetings are generally done at more of a high-level, a cursory review of the asset(s) we are considering to finance on their behalf,” Sonnenblick said. “We’ll talk about the financials—historical, current and projected—in order to determine what type of financing may be available to the client, and we’ll spend some time talking about the client’s goals with the asset.” For the firm, it’s about fully understanding a client’s goals as it relates to their ownership of the assets; this allows the real estate investment company to provide better guidance on recommending financing options.
“Subject to a more detailed due diligence review of the property, including inspections, review of financials, borrower characteristics, management, etc., after this meeting, the client should have a very good idea of what he can expect from the capital markets in terms of loan size, structure and pricing,” he said.
Some of the company’s resort transactions include the Four Seasons Resort and Residences Anguilla in the British West Indies; and The St. Regis Deer Valley in Park City, UT. One of the larger hotel deals the firm closed last year included a $135,780,000 loan for a portfolio of 11 properties for Memphis, TN-based Cooper Hotels. The firm also arranged a $110-million, 10-year fixed-rate loan for the 550-room InterContinental San Francisco.
“We are currently engaged on nine hospitality transactions that include two $100-million development deals, including a fully-entitled site with coastal commission approval on the California coast; a leasehold financing in Yonkers, NY; a $50-million interim loan in Seattle; and the sale of an oceanfront resort property on Cannon Beach in Oregon,” Sonnenblick said.
On the current lending space, he is fairly optimistic. “Every major provider of capital for real estate loans is aggressively looking for product,” he said. “This includes life insurance companies, Wall Street investment banks and CMBS lenders, commercial banks, private debt funds and mortgage REITs.” In other words, there’s no shortage of capital for real estate loans.
“We expect to continue to have profitable years going forward,” Eichner said. “Being a boutique shop allows us to provide the hands-on care our clients expect of us. We’ve been very fortunate in that we have a loyal clientele who continues to use our firm and a lot of referral business from existing clients. It is important to us to maintain our clients’ confidence in our ability to provide the best execution for their transactions and that we are their eyes and ears for what is happening real time in the capital markets for real estate.” HB