Lender Thinks Like Builder BY LINDA MOSS STAFFWRITER THE RECORD

Lender Thinks Like Builder BY LINDA MOSS STAFFWRITER THE RECORD MITSU YASAKAWA/STAFF PHOTOGRAPHER William Procida, 52, president of Procida Funding and Advisors LLC, is planning to expand his Englewood Cliffs based company. 2 Developer and Donald Trump protégé William "Billy" Procida has for the past few years been mainly focused on financing real estate ventures not far from his home turf. Procida, born and bred in Bergen County, is involved in projects as varied as the rehabbing of apartment buildings in Paterson's worst neighborhood, redeveloping a landmark hotel in Philadelphia and building hundreds of town houses at the Jersey Shore. The 52-year-old founder and president of Procida Funding & Advisors LLC in Englewood Cliffs has owned several companies during his career and estimates that he's been involved in $2 billion worth of projects. He's now managing the 100 Mile Fund, which lends to middle-market real estate ventures. Procida has done well for the fund's 58 investors - many from Bergen County and even a former Grateful Dead member - and he personally has the biggest chunk of money in the pot. Last week, the fund, which he started in 2011, said secondquarter earnings, which are not audited, rose 16.5 percent on an annualized basis. The fund has lent $51.5 million in the first half of this year. That rate of return and lending to date already surpasses the 100 Mile Fund's performance for all of last year. "If you invested a hundred grand, you got back $14,000 last year. You put that in the stock market, you don't know what the hell's going to happen," said Procida, who helped revitaize the South Bronx in the 1980s by building housing in the then-ravaged borough. Procida, a Dumont native and the son of a contractor, is expanding his small lending and advisory firm, Procida Funding. Procida, who has a flair for promotion and has often appeared as a guest on national news shows, has been hiring and is planning to move to a larger headquarters not far from his current space on Sylvan Avenue in Englewood Cliffs. The 100 Mile Fund, with seven employees, isn't hunting for huge deals. It lends to businesses within a 100-mile radius of New York City, and its niche is providing funding in the $2 million to $25 million range for office, retail, multifamily, industrial and specialty properties. At a time when banks are doing relatively conservative underwriting, and most funds just target the $25 million-and-plus market, the 100 Mile Fund is lending to struggling entrepreneurs who want to finish their projects. But the economy is changing, and Procida may be facing a more challenging environment in terms of drumming up business. Traditional bank loans are picking up in North Jersey, on pace for double-digit growth, which means fewer businesses may have to turn to the 100 Mile Fund for money. He acknowledged that bank lending is starting to ease up, but said he only expects his fund to be just slightly affected, since it only aims to do a relatively small volume of loans, not billions of dollars. "There's always a spot where we fit," said Procida, who did a stint working for Trump after a 10-year campaign to get "The Donald's" attention. The 100 Mile Fund recently closed three deals totaling more than $10 million, including a $2.6 million bridge loan to JCM Investors 1012 LLC, based in North Bergen, to renovate a 10-property portfolio in Paterson. There also was a $3.725 million bridge loan to Alliance Hand and Physical Therapy to

complete construction of five offices in North Jersey, and a $3.8 million bridge construction loan to finish a seven-story, 56-room hotel in the Bronx. "We're not the biggest but we made over $150 million in loans in the last 2 1/2 years through that fund," Procida said. "We're sticking to our knitting." The 100 Mile Fund is also active at the Shore, where it has lent money for the construction of 170 town houses in Brick Township and 200 town houses in Toms River. Procida's fund often lends money to companies that banks and commercial lenders won't touch, because they consider their projects risky business. "Let's just assume that there's some environmental issue or the sponsor may have had some financial issues, or there may be litigation," said Procida Funding's general counsel, Hackensack attorney Leo Leyva. "Any of those issues that would cause a lender to basically run, hide, say thanks but no thanks, is where Billy and his 100 Mile Fund come into play," Leyva said. "One, they recognize good real estate. Two, they recognize value and three, they know enough and been around the block enough times that they can recognize a good sponsor who knows what they're doing." The 100 Mile Fund typically offers bridge financing, a short-term loan used until a person or company secures permanent financing, or mezzanine financing, a combination of debt and equity financing. For taking on the risk that banks shun, the 100 Mile Fund charges a premium, higher interest rate than traditional financing. But once a project gets off the ground and is stabilized, the borrower is typically able to refinance on average 14 months later with more conventional, and less expensive, long-term debt. Procida's friends and business associates say his experience as an entrepreneur developing commercial real estate enables him to not only judge the viability of projects, but to lend his expertise to guide borrowers over rough patches. "I've got a third of my net worth, half of my liquid net worth, in it [the 100 Mile Fund], so I'm not scamming anybody," he said. "If I make a bad loan, the investors are all my friends, childhood [friends] in a lot of cases. And we employ local." Procida, who never went to college but now often lectures at universities, sometimes doesn't close his transactions the way a typical lender might, either. One investor Procida met at a bar in Norwood agreed to lend him $100,000 by signing a note on a napkin, while another lent him $250,000 and got his receipt on a paper plate. Overall, Procida's fund has lent from $12 million to $13 million to Charles Florio's JCM Investors 1012 LLC, which has made a business of buying, renovating and renting multifamily residential buildings in Paterson's violent 4thWard, which is strewn with boarded-up, vacant buildings. Florio now owns more than 700 units of much-needed housing in the city, creating a $40 million portfolio. "Without him [Procida], I wouldn't be in Paterson," Florio said. Procida took a chance on Florio, who came to him for help and got an initial $175,000 loan to start buying property. Procida has found another kindred spirit, and borrower, in Philadelphia developer Eric Blumenfeld, who is trying to restore the once-stately landmark Divine Lorraine Hotel in the City of Brotherly Love. The property, built in 1894, has been vacant since 1999 and fallen into disrepair and near ruin. Blumenfeld is looking for a $31.5 million loan from Procida to redevelop the landmark hotel into apartments and restaurants. That loan is still undergoing due diligence, Leyva said. "Bankers are bankers and Billy is Billy; there is no connection," Blumenfeld said. "His passion for the project approached mine. Since then we talk three, four times a day. I've never seen a banker get so involved in a deal. This project is perfect for crazy people like us." "We derisively say that banks have a 'check-the-boxes type of approach' to underwriting the credit risk, as opposed to a very experience-based methodology that Billy and I would use because we've been owners and operators," said Kenneth Pasternak, co-founder and chairman of KABR Real Estate Investment Partners LLC of Ridgefield Park. Procida, now a Piermont, N.Y., resident, counts many of his friends among his investors and likens himself to an old-time banker. Back in the day, bankers actually knew the people they made loans to and were often lending their own money, Procida said. Similarly, he has his own skin in the game when it comes to the 100 Mile Fund. Pasternak said that there aren't many, if any, defaults on loans that the 100 Mile Fund makes. "He's helped a lot of people become entrepreneurs and build wealth," Pasternak said. "I always admire anybody who can create economic activity." In fact, Leyva said some lenders actually make loans with the hope that a borrower will default, so they end up owning the property involved. "That's not Billy's mind-set," Leyva said. "His mind-set is let's make a loan, and give the borrower the time, the resources and the help that they need to put things back on track." Email: moss@northjersey.com 3

www.nyrej.com BLCD and APEX Building Group break ground on Baldwin Park; financing provided by 100 mile fund -managed by Procida Funding - NYREJ 26 Manhattan, NY Alexis McSween, owner of Harlem based Bottom Line Construction & Development, LLC (BLCD) a certified NYS and City M/WBE, DBE and LBE firm, revealed the groundbreaking of Baldwin Park, a modern boutique residential building in West Harlem. The event took place on-site at 306 West 148th St. Baldwin Park will epitomize the rich historical architectural value of Harlem while incorporating the contemporary style and desires of today s urban homeowners. The new six-story boutique residence is slated for a summer of 2017 occupancy. Units boast full floor through plans featuring 2 bedrooms, 2 baths, balconies, roof top deck and stainless steel appliances. Shown (from left) are: Robert Horsford, APEX Construction; William Billy Procida, Procida Funding; Alexis McSween, Bottomline Construction; Kevin Kollar, ConnectOne Bank and Lee Brathwaite, CEO, APEX Construction. Baldwin Park s general contractor is a Harlem-based certified MBE Company that has been actively involved in the construction industry for the past 17 years. Robert Horsford, president of APEX Building Group, said, Apex Building Group is proud to have this opportunity to be a part of McSween s team bringing to reality her vision of modern living in Harlem. Baldwin Park is projected to create 40 new jobs, spanning 2 years. Financing for the project was provided by N. J.-based direct lender, the 100 Mile Fund managed by Procida Funding & Advisors, LLC. Over the last year Procida has been quite vocal about the finance community being misguided by throwing billions at mega luxury towers for the super-rich. What really needs to be done with all the pension money in private equity is to rebuild our inner cities. A minority woman contractor building what I consider contemporary housing in Harlem is doing exactly what I have said the finance community needs to focus on. When I saw only one vacant lot, on a pretty street, near a park in a cute nook of Harlem coupled with her Bottomline Construction and Development team I jumped at the opportunity to be a part of this project, said William Procida. McSween established BLCD in 2010 as its sole principal following the most recent economic crisis. BLCD has worked on several permitted construction projects throughout the five boroughs involving design, renovations, structural work, carpentry, plumbing and electrical. As a direct descendant of Harlem natives the Baldwin Park project is a special professional endeavor. I wanted to contribute to the development and beautification of my community and Baldwin Park is my vision come to life, said McSween. McSween brings over eighteen years of practical and formal experience to Bottom Line Construction & Development. She has promoted a company culture based on her own high standards of perseverance, teamwork and a unique talent of forming successful collaborations. McSween transitioned into construction and development from a background as a Registered Nurse and FDNY EMT when she earned a Bachelor s degree in Organizational Management, and a Masters of Science in Real Estate Development with a minor in Construction Management from New York University s Shack Real Estate Institute. While earning her Masters, she worked as a project manager for a NYC construction & management firmn projects totaling three million dollars. Ms. McSween has developed and completed construction projects from ground up constructions to renovations since 1994.