Wafra Capital Partners Buys Controlling Interest in Cali Fix-and-Flip Lender
Wafra Capital Partners — the New York-based investment firm owned by the Public Institution for Social Security of Kuwait — has acquired a controlling interest in fix-and-flip lender Anchor Loans, Commercial Observer has learned.
The California-based lender was founded in 1998 with a focus on multifamily as well as single-family properties, and was the first private fix-and flip-lender to fund more than $1 billion in loans in a single year. It originated $1.4 billion in loans in 2018.
WCP has been a minority shareholder in Anchor since April 2015, Anchor CEO and co-founder Steve Pollack told CO. The firm provided equity as well as access to debt and the capital markets, which allowed Anchor to grow from a $500 million-per-year platform to a $1.4 billion platform. One of the founding shareholders plus two non-operating shareholders exited their investment in the company recently, giving WCP the opportunity to be a majority shareholder in the company.
“Acquiring a controlling interest in Anchor, an investment partner of ours since 2015, represents a smart and agile decision to add to our growing real estate debt investment portfolio,” Michael Gontar, the CIO of WCP, said in prepared remarks. “Anchor stands out as the strategic leader in a robust and growing fix-and-flip market, consistently posting strong numbers, through varied market cycles. We look forward to its continued growth as we look to build our investment footprint.”
Anchor provides acquisition and repair financing for multifamily properties and small balance commercial properties as well as single-family residences. The loans typically have a one-year term, after which the investor will sell the property or refinance the debt with a longer-term institutional-type financing and hold the asset for rental income. “For the vast majority of our borrowers, the intent is to find a piece of real estate that is undervalued or needs to be repaired to bring out the true value of the property,” Pollack said.
Located in Calabasas, the company started originating loans in South California before branching out to other locations and states. Today, although 50 percent of its lending activity is in South and North California, it now lends in 45 states plus D.C.
As we progress through one of the longest market cycles and competition for assets heats up, an understanding of the cyclical nature of real estate investing is key to Anchor’s investment philosophy, Pollack said, which in turn continually informs its risk-mitigation strategies
“We are excited about how WCP’s investment and confidence in our lending strategy can help us grow deep into the future,” said Pollack. “Both firms shared a belief that taking the long view, even in the fast-paced fix-and-flip industry, is essential to sustained success. Working together made sense for both teams and we look forward to what we can accomplish together.”