Century City-based real estate merchant bank Dekel Capital Inc. has introduced a new credit platform to assist multifamily property owners and investors in obtaining funds for purchasing and refinancing assets. The firm plans to deploy $100 million in mezzanine and preferred equity capital over the next year. 

The addition of this equity strategy expands Dekel’s services, which already includes permanent loans and joint venture equity.

After launching a correspondent lending platform in March, Dekel identified an opportunity gap in alternative financing for real estate development.

“As we’ve been originating new loans for that platform, we’ve seen a market opportunity to come in with some subordinate debt, either preferred equity or preferred equity mezzanine to help sponsor essentially refinance out completely of their existing debt without having to come in with fresh capital,” Shlomi Ronen, Dekel’s founder and managing principal, said. 

Changing interest rates and inflation have tightened the lending market. Macroeconomic uncertainty pushes institutional firms with over $1 billion in assets to sideline lending for smaller real estate borrowers. According to the latest survey of senior loan officers’ opinions published by the Federal Reserve in April, respondents from both major and middle-market banks said demand is weakening for commercial real estate loans.

The dislocation of the capital market has cleared a path for Dekel to offer $2 million to $10 million in preferred equity for what they believe is an underserved segment of the real estate borrowing community.

“What we are seeing in today’s lending environment is the majority of borrowers still needing to fill on average a $2 million to $10 million gap,” Dekel vice president Benjamin Grosberg said in a statement.

Dekel, founded in 2011, historically focused its financing on commercial real estate developments in the western half of the United States. According to Ronen, the new credit platform will finance multifamily buildings in areas with little to no new construction across the U.S.— avoiding potential risks with supply chain issues and growing building material costs.