BuildForward Capital LLC
United States of America
Last updated 13 May 2020, by Impactyield.
Developed countries (203) / More developed regions (202) / More developed regions (North America, Asia & Oceania) (153) / United States of America (112)
BuildForward Capital operates a lending network of high net-worth individuals and small institutions that directly lend to a real estate construction project through separately formed operating companies for each project. Each project is structured as a commercial construction loan transaction and is has the underlying real estate as the primary collateral. Each lender owns a direct loan share of the project and consequently has no "pooled" risk of commingled capital across various projects. BuildForward Capital LLC advises the sourcing of each project, structuring of the loan and organization of the entity housing the project and supervises the construction process to guarantee the energy efficiency mission.
The key financial attractiveness is the fact that the network provides for high credit quality assets (collateralized by senior claim in the underlying real estate) while providing construction loan type of returns (6-8%), which is well above existing fixed income returns or rental yields from real estate. As part of a small group of lenders that directly lend to each projects, lenders have the ability to see the environmental impact of the capital directly,while having a lot more control over the safety/return characteristics of loan than in a fund or a securitized loan structure.
Lenders are charged 50 bps a year for reporting/tax preparation and organization management fees. The rest of the costs are borne by the borrower.
of track record
the year funded
Key performance indicators
Asset manager: BuildForward
Product track record: Fund has 10 years of track record
Target IRR: 8%
Committed Capital: 10,000,000 USD (US Dollar)
Target return category: Risk-adjusted market-rate of return
Fund domicile: United States of America
Product status: Open - committed capital
Inception year: 2013
Vintage year: n.a.
Target region: Developed countries, More developed regions, More developed regions (North America, Asia & Oceania), United States of America
Target close date: 01/06/2013
Product term: 2 years
Assets under management: n.a.
Investment size: Min: 300,000; Max: 10,000,000; Avg: 1,000,000
Currency of investments: USD (US Dollar)
Currency for fund / product figures: USD (US Dollar)
Fund investments to date: 0
Fund investments to date exited or repaid: 0
Management fee: n.a.
Carried interest: n.a.
Hurdle rate: n.a.
GIIN Investors' Council Investment: No
Limited Partners / Investors: n.a.
Limited Partner / Investor Type: Development Finance Institution (DFI), Family Office
Phone number: 2126078144.00
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Although buildings consume 49% of all the energy consumed in the US the issue of environmentalism in the real estate industry remains focused on the “sustainability” of the actual building materials rather than the energy use of the structure. This diversion of focus away from energy use has been because the operating costs of fuel for buildings are historically much lower than construction costs, making the case for investment in energy efficiency problematic using conventional “payback” analysis. Government incentives focus on affordable housing segments, the purchase of specialized equipment and paying for energy audits, leading to a market view that energy efficiency projects require subsidy.
BuildForward’s research suggests that, with strict underwriting standards and deep energy retrofit/new-build designs that achieve 80-90% energy savings, energy efficiency projects can be economic and funded without government intervention. The key is to motivate behavioral change of the building owner at the time of capital commitment, by making the access to debt capital contingent upon a highly energy efficient design. BuildForward’s mission is identify, design and provide funding for those construction projects that will reduce the energy consumption by well over 80%, consequently promoting the highest possible energy efficiency standards in the building community.
Full impact reporting will be handled at the level of each loan and aggregated up to the portfolio level.