BIG RESULTS FOR SMALL LOANS 

Commercial real estate firm champions underserved borrowers.

It’s nearly unheard of for a commercial real estate pro to launch a firm/lending platform with the first loan in the mid-eight-figures. But that’s exactly what Lee Kotler did with the formation of his company, Konnect Real Estate. Seeking to fill a gap often left by traditional banks, Kotler established his firm to focus on smaller commercial real estate loans that require some work and problem-solving.

The loan that coincided with Konnect’s launch was one most banks would have passed over. Introduced to a Southern California-based investor with a growing real estate portfolio who needed help arranging and organizing capital, Kotler was able to procure creative short-term financing from a Chicago-based bridge lender. In this arrangement, several properties served as collateral, allowing the investor to execute his business plan. “This transaction gave me the experience, creativity, and foundation to make commercial real estate loans on a smaller basis,” Kotler explains.

“Not many lenders like to spend time in the smaller loan market, given they would rather write a $5 million loan than a $1 million loan, so it’s an area where I can be impactful,” he observes. “I’m also not afraid of underwriting challenges that more traditional lenders would shy away from.”

As part of his venture, Kotler launched a privately held real estate debt fund, KNCT Lending LLC (KNCT), with the focus on short-term and transitional capital “to provide real estate owners and operators with flexible, creative, and reliable short-term lending solutions for their time-sensitive and event-driven real estate transactions,” he says, noting he has closed more than 30 loans since 2018. The fund offers low loan minimums (from $250,000 to $3 million) and has more flexible underwriting guidelines than typically available.

Kotler founded Konnect, which has offices in downtown Chicago and on the North Shore, with more than a decade of diversified experience—from acquisitions and dispositions to all forms of real estate brokerage. Thus far in his career, Kotler has closed over 200 real estate transactions, totaling more than $300 million.

His focus now is on commercial real estate debt procurement and originations, plus property and asset management of both value-add and distressed properties. “Simply put, there are many occasions when a borrower needs to and wants to purchase a property in short order and can’t get a bank to meet the timeline of the contract. KNCT can typically close quicker and with less ‘hoops’ than most lenders,” says Kotler. “There are other times when an owner had a sale, but the buyer fell apart, and the loan is set to mature. In these instances, our funds can help pay off the impending loan maturity and give the seller more time to find the next buyer.”

For example, KNCT recently had a borrower come to the firm while purchasing a former hospital campus. “The borrower was redeveloping one of the hospital buildings that was mostly vacant,” Kotler explains. “He needed short-term funds for leasing costs for new tenants before he could close on a longer-term permanent loan with a bank. We were able to provide this funding in a timely manner, knowing the value would be there once the property was leased.”

There are many borrowers out there in similar scenarios. “Real estate owners can be ignored by traditional lenders because of the complexity of a transaction,” Kotler concludes. “But at KNCT, we take the time to understand not only the specific property and market, but also the borrower’s resources to craft a solution that helps, whatever the need may be.”

For more information, visit konnectre.com.