Kevin Kim: You’re listening to lender lounge with Kevin Kim, a podcast dedicated to helping our listeners in the private lending industry grow, improve and streamline their business. I’m Kevin Kim, partner at FortraLaw, the nation’s largest private lending law firm. Join me as we chat with the best and brightest in private lending.
They’re eager to share their years of wisdom and best practices for lenders, brokers, borrowers, investors and more. Subscribe to lender lounge on your favorite podcast platform and visit our website, FortraLaw.com to learn more about how we can help you scale. Check out the episode summary below for other valuable resources.
Hey, everyone, welcome to another episode of lender lounge with yours truly Kevin Kim. Today we are in the computer, but we are shooting with the guests across the country. And I am privileged to call him a client, but also call him a friend.
And we have Ezra with ice cap here. Ezra, please introduce yourself to our audience. Tell us a little bit about about ice cap and let’s get started.
Ezra Dweck: Okay, Ezra Dweck, president and co founder of ice cap. Tell you a little bit about ice cap. We Joe Ovett and I started nine years ago as an offshoot of his family.
We were looking to start a real estate family office. We started in a month, it’ll be nine years officially, but it really is a little bit over nine years. Since we actually started looking around unofficially, we knew we wanted to get into real estate together, we’re going to start deploying family capital.
We didn’t know exactly what we were going to do with it. And what happened was we were looking for one of the things we were looking for was equity deals to invest in, in one to four family and small multifamily. We kept getting outbid.
And we said, Hey, one of the one of the syndicators who outbid us on the deal, pitched us to invest in his deal. So we looked at the deck and we said, Hey, we were out at 3 million bucks, you’re bidding, you’re bidding three, two, and you want to lay your fees on top of that we’re not going to be in. But we see that your deck includes in a hard money loan at 12%.
I think it was like a 2 million and change. So that made sense for our return profile that we were looking for. We had already valued the property.
We said, Hey, if we need to own this thing, we’ll be fine to own it. We don’t think it’ll get there. But we’re happy to make our return at this lower at this lower risk point.
So that we did our first loan in July of 2017. We’ve since expanded, we’ve done I think across 5400 loans and four and a half billion dollars. Our focus is one to four family, small multifamily, and mixed use light rehab, heavy rehab, ground up and bridge and do a good deal of the DSCR term loans for the one to four families, some of the small multifamily nationwide footprint, but focused in the northeast where a lot of our businesses coming organically, but looking to continue to grow beyond there.
Kevin Kim: And as one of the, I guess, well, established now, RTL shops and private lenders out in the out in the East Coast, I’m glad we’re talking because we’ve, you know, we, this is the East Coast has been in the news a lot, right? And, you know, past few years had a tough go things, you know, you guys have been around now almost 10 years, has your business shifted at all, away from certain asset classes toward other asset classes with you know, all the different, I shouldn’t call it trends in real estate, right? Because multifamilies had a tough go, have become back lately, you know, one to four families having a tough go, there’s challenges with underwriting in one to four, you know, how’s, how are you guys weathering the complications out there?
Ezra Dweck: So I’d say that we’ve weathered it pretty well. We are family office based, right? And we look at things as it as it’s our own money.
We’ve raised a fund. And the fund is mostly it started off as mostly friends and family. I have a really good lawyer who who handles my, my fun docs.
Kevin Kim: I heard he’s pretty smart.
Ezra Dweck: He’s actually he’s really good. He’s really good. So we always looked at it as our own investments.
And as money got looser, I’d say that we tightened up probably, let’s say 2020 2021. And really, we’re very much credit focus. And my partner, Joe, I’d like to say if I lose money on a deal, because an appraiser said it’s worth something, my dad will kick my ass.
And I’ll kick all our asses. So we eventually report to the Joe’s dad. And when you have that mentality of Yeah, we just we don’t want to lose money.
You grow more slowly. But you avoid a lot of the pitfalls. So when you when you talked about like, you know, there’s been storms in multifamily in New York.
We’ve really avoided those storms. You know, I’ll appreciably so I’m sure some of its luck. So yeah, but the reasonable amount of it’s really the effort.
We do more than we need to to sell loans, we do more than we need to generally for people who are going to balance your loans as well, or that’s difficult. People are gonna balance your loans as well. So we pass on a lot.
And I think because we pass on a lot you know, we our performances has been pretty strong. So the multifamily for us, we’re cash flow based guys was like, okay, we want to be we want to always be a 10 debt yield. And that was how we figured things.
So even when interest rates were going crazy, ended up at a 10 debt yield, we were okay. The stuff that was more questionable. We have a full team here that we call our deep dive team, that’s doing a forensic underwrite into the sponsor, their families, the property, understanding really the ins and outs of the transaction, seeing who the seller is seeing what the comps are making sure that we’re avoiding some of that, like that risk that’s that that can take down firms.
And luckily, we’ve avoided I think, though, that once we started doing that, the the reality is a lot of it avoided us. And when they say water flows to the lowest point of love finds its own level. What we’ve seen is that because people know we’re actually going to look, they won’t bring us the deals where they’re afraid we’re going to look, it’s kind of a virtuous cycle.
We had brokers say, you know, we appreciate you guys, we’d rather go to lenders who don’t look, we know you’re doing the right thing. But we don’t want to have to deal with people who are actually looking at the loans. So that’s been good for us.
I mean, look, as markets move, we’ve, you know, we’re not smarter than the market, but we’re just willing to do a little bit, a little bit more work than others, maybe sometimes. So we’ve been fortunate to avoid some of the pitfalls that others have fallen into. We also don’t think we’re magic.
So if we’re getting a deal, the question is always why? And what why is this coming to us? And I told other lenders who came into our into New York, I said to them, if you’re getting a New York multifamily deal, and you’re not one of the top three guys here, you need to ask yourself why.
And it’s not because they like you better than me or better than the other two major private lenders in New York, maybe one and a half private lenders in New York. And there’s something else going on. It’s probably because we’ve turned down those deals with these people we don’t want to deal with, or things that we know that you don’t.
So you can call me and say, Hey, Ezra, why am I seeing this deal? And if it’s that your capital is cheaper than mine, you’re going to win the deal anyway. So I have that that should be the only reason you’re going to beat me because your capital cheap or your underwriting standards are more relaxed, and you’ll go higher in LTVs.
Otherwise, you shouldn’t be getting that deal.
Kevin Kim: I’d like to take a step back and because you gave us a little bit of a little nugget of how you guys got started. And many folks don’t know that that ice cap was founded more as a family office before they were a lender. And so give us kind of the gist.
How did you guys set up as a family office together? Like, how did all that happen? Like, did you guys?
Are you the is there a separate family office that runs things as a traditional one? Was it founded to do this? Like, what’s the whole backstory behind getting this part of the business stood up?
Ezra Dweck: So Joe’s family is a significant, by the way, not going to move my camera, but I do have Joe sitting over on my left. Joe’s family has a significant wholesale manufacturing business, right? I don’t have a 1010 plus figure your annual revenue business.
And they had more and it was smaller back then. But they had more money than they were spending. They liked the real estate play.
And they said, Hey, you guys go out there and figure out what to do in real estate. It wasn’t an unlimited pool of money. And we said, Okay, we we liked the debt space.
And they said, Okay, you like that, but you’re only going to make 12%. The two of you want to get paid, there’s a cost of capital associated with our capital. How is this going to work?
So we said, just give us a little bit of time, we’ll structure something that’s going to make sense. So we started doing some reverse syndications early on. So we said, Okay, what what are the what makes a good lender in this space?
And this was again, nine years ago. So there were different things that made a good lender. So for me, it was basically, there were two types of lenders out there, you had the rich uncle, and you had the large credit shops, right?
And it wasn’t as developed as it is today. So the rich uncle we like because he moved really quickly, but he’d run out of money, the large credit shops, large debt funds, impossible to do a deal with, they didn’t run out of money, but you couldn’t really move, we couldn’t move quickly enough for the speed of business in New York. We said, if we can kind of bridge that, that would be interesting.
So we had money enough to be rich uncles. And that was going to keep coming. But figuring out how to have the not run out of money, like the big debt shops, that was one of the things we had to figure out.
So early on, we said, Okay, we’re gonna commit to deals where we have the money in the bank. So it was me or Joe going out to a building, they need to close in three days, we did our own underwrite, we didn’t need appraisals, we got comfortable quickly, we got comfortable with family money. And then we’d move and we institutionalize a bit.
So like this really, really early, for us, capital markets was we get our appraisal, we get other things done. And then we’d go out to friends and family and say, Hey, we have this deal, we’ve closed already. We are going to get some back leverage.
And we’re going to bring in some LP partners on on the deal. So we take a 12% deal, and we get an origination fee, we’d roll that origination fee in. So we never had a conflict with our investors.
And the investors said, Okay, this makes sense. They started getting their money pretty quickly. And we said, Hey, you’re gonna be getting, you know, you’re putting $100,000, you’re gonna get $1,083.33 a month, it should come within 45 days by the middle of next month. If it doesn’t, something’s gone wrong. And if it’s more than that, something’s gone wrong. If it’s less than that, something’s gone wrong, there is no story I can tell you other than you’re getting this money.
And we’re not going to take any money, we’re not going to make any GNA, we’re not going to make any, and there are no GP fees. There’s no keep the lights on fees until you’ve gotten back all your money plus preferred return, and then we split the fee, then we split. So the family started liking that they said, Okay, so we can take this amount of money you’ve given us and multiply it, let’s say by 10, or 20.
So all of a sudden, we could now act as a balance sheet lender, true balance sheet, but kind of offload balance sheet. So we were doing that for, let’s say, eight, nine months. My dad would speak to every day who passed away in October, October of 25.
In 2018, he sent me an article about a note buyer that was buying up loans from lenders. And to me, this was a new thing, I hadn’t heard of it. And so I said, Oh, this is interesting, pop, thank you, called up that note buyer, didn’t get a callback, called up that note buyer, the second time, didn’t get a callback, called up that note buyer, a third time, third time’s a charm, right?
Still did not get a callback. So I reached out to the CEO on LinkedIn, but in a LinkedIn request with him, he accepted it, reached out to him on emails and hey, just following up on LinkedIn, I called three times, we have a family office, we have some money behind us, we’ve been doing loans for a little bit, we have a real process, can we talk. And that was the beginning for us of institutional capital.
And from there, we went from doing like a million bucks a month, I think quickly to 15 million a month. And in 2020, in 20, for the first half of 2018, we did like $6 million. And for the second half, we did $90 million.
So it was quick growth. And it really put us on the map. We had a lot of growing pains, as you can imagine with that.
And we had, there were a lot of lessons that we learned. One of the lessons that we learned was another was lesson was more fear of just having this one institutional takeout. So we started to build around that.
So we built up a capital markets department, we built up our investor relations team, we said we, the institutional money is great, but we want to have committed private capital as well. And this is in 2018. Or when was this about when you started doing that?
2018, early 2019, we said, Okay, we said we set up our capital markets team. And then 2019, we set up our investor relations team. And by 2020, we had, you know, we said eventually, the capital, the social money is going to dry up and something’s gonna, there’s gonna be a complete pause.
We were right. We just didn’t know it was gonna be before we actually raised our first fund. And that’s where we that’s where we ended up raising our first fund during COVID in 2020.
Yeah, so it was, it was interesting, because we the thesis really was proven that yes, the capital markets did shut down. And there were interesting opportunities. And we were unable to take advantage of them with institutional money at the time where we said, we called up our note buyers and said, Hey, if I have a no brainer deal for you, 30% hits the numbers that hits the numbers that you would want, whatever, is there something to talk about?
And the answer was, no, there’s nothing, nothing we can do.
Kevin Kim: Very interesting evolution, because like 2017 2018, a lot of folks were in your shoes, right? A lot of folks were in the same. Because starting in 2014, loan buying became all the rage.
And in 2018, it was almost a foregone conclusion that everybody and their mom was selling paper. But at the same time, they were doing the same thing you were like, they were basically married to one shop, maybe two.
Ezra Dweck: So just to be clear, Kevin, I didn’t I didn’t know what was happening in 2014 2015. We weren’t lending yet.
Kevin Kim: Right, right. You came on the scene, and it was a big time. And that trend moved east slower than it was out here.
And we started seeing it here in 14. And then we started seeing it out there in like 16. Right.
So but at the same time, what’s interesting is, you you guys were able to weather the storm without the fund. And you built the fund during the time when everyone else was scrambling. Right.
So talk about that real quick, because like the idea, because there were a lot of folks that ended up in that same situation, right? Okay, we have loans, we built a great desk to send loans to the secondary 2020 hits, we don’t have the ability to fund loans anymore. And they don’t really think about they hadn’t planned through this.
Right. So when did you guys are planning through this? Like, okay, we have to become a direct lender.
Like when was that planning process beginning was well before COVID or the planning was 2019.
Ezra Dweck: The plan was 2019. We so we needed we knew we needed to expand. So I put we had these choke points to our business I had on the wall, like where our deal flow is coming from.
It’s it’s too tight. And then where the capital is coming from too tight. And it was really like you said, it was really the one note buyer, who was a great partner, but just still only one, right.
And then just that, like the institutional capital, we had family money enough to operate our business and to originate to sell. We had a warehouse line with Webster Bank, who was a great partner all along and thinking about how we could grow that if that was the direction we wanted to go in. We have by 2019.
We said that this has to we need to evolve and it was adding more institutional partners, which was part one and then it was it was raising the fund.
Kevin Kim: What was the thought behind the fun side? It was was it because there’s only a finite amount of family office capital?
Ezra Dweck: Or was it because of something else? It’s interesting when you when you have constraints, you can you do more interesting things, right? So if we had just unlimited family capital, we probably wouldn’t have done any of this stuff.
So the family capital is like, all right, we’re gonna give you x number of millions of dollars a year to grow this business. They’re not gonna just dump a bunch of money into it doesn’t mean it wasn’t it wasn’t a $200 million check. It was excellent.
Like I said, x number of millions of dollars a year that with a commitment was they’ll keep growing it time. So if we were going to buy real estate equity, would that be fine, right? But for the debt, we wanted we were scaling faster than that could happen.
So the idea was we wanted to be able to scale and be able to be there for our clients when things turned off turned on. So for us, it was something that had to happen. But we knew that we couldn’t be reliant on the capital markets turning off.
The other thing for us, which was important, was we wanted to be a lender. Right? So it went from so we were a lender in 2017.
In 2018, we turned into an originator, which, which I think is a different thing than a lender.
Kevin Kim: Yeah, expand on that. Because this is something I talk about all the time, and people don’t quite get it. And so your take on is probably is better than mine, usually, because it’s, I’m the lawyer here.
Ezra Dweck: So it’s not I’m not the operator. And I’ll get back to how we turned back into becoming lenders. And so as an originator, there are things that you’re doing.
So if you’re a lender, you have $10 million, you’re going to lend out that $10 million. As you see fit. You you’re holding the risk of that.
If there’s a loss, it’s your loss. The problems are going to be your problems, but the decisions are going to be yours as well. So closing that loan, you don’t ever need to call and ask permission of anyone else to close it.
But if things don’t go exactly well, that you’re holding the risk as an originator. However, you’re stuck with someone else’s guidelines. If you’re falling outside of those guidelines, you need to ask permission.
But if it falls within those guidelines, and you’re not breaching your MLPAs, which we don’t need to define here, because everyone’s listening to this knows what the MLPA is. It’s not your risk. And I don’t want to say you don’t care.
But as an originator, like I gave you what you asked for. And I think that’s one of the things we talked about before how credit quality in the space has slipped a bit. It’s because you ask for this, I give you this, I’m building to a box.
As opposed to if you have your own originations, your own balance sheet, you’re, you’re digging in, I don’t care what the appraisal says, here’s what we think the value is, I’m not going to hold that risk. But on the other, on the other hand, we can say I like this deal. I don’t care what the appraisal says.
I don’t care that your unit that your unit size is two square feet smaller than what than what the guidelines are. I, I’m going to give you this money, and I don’t need to ask permission. And when I tell you I’m giving you the money, when I tell you we’re closing this deal tomorrow, there aren’t a bunch of calls that have to happen between now and then.
So for us, it was about being an originator and knowing being no longer just being a virgin. So it was two things that shifted with us. It was one saying, we never want to have to ask anyone permission to close.
If we like the deal, we have committed capital, there’s it’s discretionary, there’s no one that we’re speaking to, for our mission. And our borrowers know that that’s the case. But for that, for us, that also came with an extra level of discipline.
We’re saying the risk is ours. We’re making the guidelines at this point, and we’re holding it. And there’s no one to point the finger to said, yeah, they said it was okay.
So for us, that was shifting, it shifted us in one way, it made us a stronger partner to work with, because we had the money, we could do whatever we wanted. In other ways, it made it made our growth slower. Because we were looking, we were looking at things and saying, yeah, we appreciate that another guy will do this loan, we won’t.
And for our originations team, it was it was a tough, tough road. When even for like DSCR, which is really just supposed to be a widget factory, you’re saying that we don’t believe the value of this property. What do you mean you have an appraisal, you have your CDA, everything’s fine.
Nobody else cares. We said, yeah, it’s not going to EPD, you see this guy has other loans, they’re not EPDing. Great.
We still don’t want to be there. We still don’t, we still don’t believe in the credit. And for us, it caused slower growth.
But we think a more sustainable growth and, and borrowers who can depend on us as being a lender that will close and will close when when they expect and do what they what we’ve said we’re going to do.
Kevin Kim: You see so you’ve seen we’ve seen I mean, even from 17 today. I mean, from from my first 1414 ish to today, like the cautionary tales of grow at any cost, right, like grow at any means necessary. You’ve seen so many cautionary tales of that and shops have shuttered and sponsors have reopened or new duration or version 2.0, whatever, with that mentality. So it’s the growing the growing trend on our show seems to be at least with a lot of the guests has been the same kind of sentiment, especially the ones that are independent lenders is that we yeah, it does suck. Because we can’t do all these loans. We’re saying no more often than we’re saying yes, but we’re also able to sleep at night.
And we’re also able to grow the way we want to grow and build a business we want, right.
Ezra Dweck: So I think that the what, and I we had we did securitization last summer, we went on the road and talking to bond buyers. And I said to them, like they said, How are you different? I said, one of the ways we’re different is our Genesis was in a we haven’t our family.
So we have it says we have enough money. Yeah, don’t lose. We don’t need you guys at a home run.
Don’t lose our money. We’ll be happy. We don’t care if you don’t do a deal for the first two years was literally what they told me.
If we don’t do a deal for the first two years, you’re fine. We’re still gonna pay you. Don’t worry about it.
Just don’t lose. So for us that don’t lose mentality, and my partner’s having enough money, and this is not either is a big business, but it’s not significant relative to the scale of the family. The mandate for us is grow, grow, grow smart, make it a business that’s going to be good for everyone’s kids and grandkids to go into and have it something that’s built to last.
Kevin Kim: Right. So it will cut one common question I like to ask on the shows is you got to the foundation of the ice cake, but there’s a moment in life cycle. And you guys are storming the beach and you guys are growing and growing.
But there’s this moment in the kind of earlier part of the life cycle that you realize, hey, we’re actually we got we got something here, right? We were cooking with gas now. Was there a moment for you guys in that earlier stage of the of the company?
Ezra Dweck: Was there a moment for us when we realized that we have something I think it was? So I remember moments along the way? Yeah, but it could have been one, right?
And I’ll just tell you, it, you know, I mentioned my dad before, and like, he and I talked a lot about business. And he was my phone call every morning during my during my commute. And it was in February of 2020, that we that we looked back.
And we said, I said to him, I said, pop, I said, we’ve been growing, I said, and we’re gonna hit 500 million trailing 12 in March. And if we don’t, something will have gone very wrong. So we didn’t hit 500 million trailing 12 by March of 2020.
And something did go very wrong COVID came in and knock the world out of alignment. But I think that when we when we pass that $100 million mark, and we saw that was not it wasn’t chunky deals. It was, I don’t say they were bigger deals than what typically is going on out there in RTL.
But it was granularity. Once we hit 100 million, we said that this is something that we’re really going to focus on. It’s not going to be a side business process that we’re investing.
And the interesting thing was that we didn’t even have a trade name that we started out with. We just had individual LLCs for each loan. It was that, hey, this is actually going to be a business.
And by 2018, we said, Alright, we’re going to do this as a business. And by 2019, early late 2018, we realized that, okay, this is gonna be something with legs. At the time, it’s all kind of New York, New Jersey, or was it so originally, it was pretty much all New York, New Jersey, New York, New Jersey, or lender or borrowers who branched out, but we knew from New York and New Jersey.
Well, that’s, yeah, that’s a lot of volume for this one market like that.
Kevin Kim: And it’s not like it’s a, it’s a big market, but it’s still like, it was hyper competitive market. So that’s, that’s great.
Ezra Dweck: There was why the ice cap an actual company that you said you’d have a trade new ice cap wasn’t a company at the time, or like, we had a different name, which we used, which we found out might have been infringing on other was a different name, okay, on other intellectual property. So we ended up it was close enough to ice cap that we maintained our brand equity. But ice cap was the was what we what we ended up with that was that was the first real branding of the company.
Kevin Kim: We don’t usually get guests with unique sounding names. There’s only a very few but like, I gotta ask what’s what’s ice cap? What’s the the generation of the name?
Ezra Dweck: It’s an interesting name. Yeah. So again, mentioning mentioning Joe, since over there, he stepped out, but when he started in real estate, he was just gotten engaged to his wife.
So he was buying real estate for the family. This is pre are pre pre the word when he and I got together, and he had bought a wedding ring and he was thinking of ice, like diamonds ice. So he he was buying properties for the family.
That was their first round of real estate family office. And he he said, Okay, we’ll call it ice properties one ice properties to ice properties three. And when we started, we said, Okay, we’ll just use that name.
We’ll say ice lender one ice lender to ice lender three.
Kevin Kim: No, I see where you’re going to your issues. Yeah.
Ezra Dweck: So it was something that we found, like, we tried to trademark the name, our lawyers said, No, you can’t trademark that name. So find a different name that works. And we’ve been ice ice cap since then.
We like the idea because I still the same ideas, right? The the idea of ice and bling and then cap makes people think about capital, but it really is one word, legal disclaimer, ice cap is one word. So we’re not ice capital.
We are just I like it. I like it.
Kevin Kim: Alright, so let’s let’s get into the you mentioned securitization a second ago. And it’s something that is being discussed heavily. We’ve had we’ve had met a few guests now talk about it.
But it’s interesting because you guys did one that’s a little bit outside of what our previous guests have done. It’s more multifamily focused. And that’s novel in the context of traditionally in the commercial real estate realm, it’s it’s CLO.
Right. So like, talk about talk about that a little bit, because it’s, it’s, I mean, first getting through that. I mean, it’s, it’s still never easy.
And and also the variation you guys did, because it’s a very interesting proposition, comparatively speaking.
Ezra Dweck: Yeah, so I love the securitization market for our space, I think it’s going to be one of the great equalizers. Obviously, we know that the space has changed over the last eight, nine years, to where, to where the originators lenders are doing their own securitizations. But our ours was different.
So Stephen Schwartz is our head of capital markets calls it an RTL style multifamily securitization. So usually these things are really good for one to four family loans. Ours had no limit on multifamily.
So we’d go up to 100% multifamily. And because we’re New York guys, we had up to 75% New York concentration. So it was a an interesting sell, right?
It was my first roadshow. Stephen Schwartz is our capital markets, David Jacob, who’s our head of credit. We then we did it together.
And we went around explaining to people like looking at our performance in New York, going through our underwrite going through like the deep dive process that we’re doing. Our relationships with local borrowers, they got comfortable with that relatively quickly. But the origin who was our investment banker, he was he said, I will sell this because I know that you guys are really good at this.
But it’s not something that’s a normal thing to get done.
Kevin Kim: Correct? Yeah. And the vintage and timing you guys did it, there was a lot there was still a lot of market concern about multifamily at the middle market level in the in the traditional multifamily finance sector, like, I’ll say that mom Donnie had just won the primary.
Ezra Dweck: So he was coming out with these anti I don’t even call it anti real estate, more like anti free market commentary. That was making the bond buyers nervous. So we went through the things he was actually saying and said how it would affect how those things would affect them.
So we sold through mom Donnie as well, which I think we ended up being right in our talking points.
Kevin Kim: And why not pursue a more conventional CLO type product as opposed to as opposed to the securitization strategy?
Ezra Dweck: I’m not an expert on it. But I think that for us, the securitization made sense because of the revolving structure of it. The granularity of our deals, small deals.
Kevin Kim: What are those deals? What’s the average size on those deals?
Ezra Dweck: Usually, I think the average deal size in our funds about $3 million. Okay, that’s why. Okay, that makes sense.
Awesome.
Kevin Kim: Okay. Yeah, you got to have a revolver for that. You’re not going to set a fixed type bucket for that.
Yeah. Okay. Okay.
Ezra Dweck: So it makes sense. We were, you know, it’s, and for us, it was also not intended as and I’m going to quote, margin again, it wasn’t intended as a risk transfer. It was intended as a, as a financing vehicle.
So for us, so for us, our fund is generally three to one leverage, or maxing out intentionally a three to one leverage, we look at this as, as leverage for the fund, even though I’m pretty confident that our fund docs don’t include this leverage, but thematically, and just in terms of like a business perspective, we said that we want to look at this as, as leverage for ourselves. So we would just use, use lower leverage for the rest of the fund. So our warehouse lines were barely being used.
And the bond buyers really like that. Like, oh, you guys are not going and we didn’t sell, we didn’t sell meds. So we were only nine to one leverage on this position as opposed to 19 to one.
And everyone thought that was amazing for us even nine to one felt like a lot. But the idea for us was we’re keeping it relative like the overall leverage relatively low and people people appreciated that.
Kevin Kim: Yeah, I mean, there as a as I mean, they’re basically in the lenders position, they’re going to love the fact that they’re the only lender in town here. There’s no competing. There’s no competing warehouse lines being accessed or tapped or anything like that, which we do have warehouse lines, right.
But again, keeping it low, not not looking for max leverage, that’s going to be deployed in come in in conjunction with their leverage, right in the aggregate is still not very low. So they’re very, they’re getting Yeah. And I think you’re right.
I mean, the the general consensus of all the guests who have achieved that major milestone has been that we view it as leverage, right, we view it as a means to lever and increase our performance. But at the same time, they were talking about how difficult it was.
Ezra Dweck: So for us, I’ll just say it wasn’t really means to increase our performance. We weren’t looking so we had a pretty good counterparty for warehouse leverage. Our rates were were good.
What we were looking for, though, is similar to why we raised a fund. We wanted committed capital. And we wanted committed financing.
And for us, there were there were grumblings of what what are warehouse lines going to do? And we just we just said we can’t have we can’t be subject to just what they say someone says one day, hey, we’re not lending anymore, even if it’s a committed line or not. But once you have the securitization, that money is there.
Kevin Kim: Right. And our guests don’t probably don’t is when you do a securitization, you are the issuers, you are it’s your capital, it’s your capital. It’s not like it’s some third party issue or lending to you.
It is your capital that you have new covenants, but is committed capital for sure.
Ezra Dweck: So what a warehouse line if they don’t like New York, they can just say, hey, we’re turning off the screws in New York, or making it things we’re making things tighter or more difficult for your wife, or one of their other borrowers goes goes haywire it has major downstream effect. We’ve seen that happen. Right.
And the question is, hey, let’s talk about these loans. I don’t want to talk to anyone. Part of our business is like not talking to people, it’s not having to ask permission.
So when not having to ask permission, once our leverage terms are agreed on, and just going through TPR saying yes, we’re doing what we’ve all agreed to, for us, it was something that was more important than being able to make more money. Right.
Kevin Kim: And that and that’s a part of being independent. And I think that’s what’s the putting the one of the major themes of your story is that independence is paramount to ISCAP. Freedom is paramount to ISCAP, which is huge.
I mean, the lenders fail to realize how important that is. And originators don’t even understand the idea of it. It’s very, very different.
Okay. And can you talk about, you know, I guess the the challenge of getting that done, because it’s, I always want to stress this to the audience, like it, it sounds cool. It is cool.
But at the same time, it does come with a cost. It does come with a lot of resource drag. It’s not for the faint of heart.
Right.
Ezra Dweck: So I would say that we were built to do this. So the capital markets team that we had, Stephen Schwartz from Deutsche Bank, and Jeffries, and Macquarie, and David Jacob from Prudential, and he was the the head of credit at Turek, Felix Rivera, who’s our CFO, also coming from Deutsche Bank. It wasn’t from like, for my perspective, and Joe’s perspective, other than having to go do the roadshow, it was really not difficult.
And our investment banker was was great. It wasn’t that hard. But just I think it’s because we spent years preparing to get there.
And Stephen, who had been with us for many years, has said, Okay, we what we are doing is gearing towards securitizations. So we’ve spent the years having the right people, the right processes.
Kevin Kim: That’s very underlooked at every store we have of a lender going to securitization is that it was so difficult, but the same story rings true, they didn’t have the internal resources, right to actually execute well, and it was novel, it was novel to them, whoever it was on the team that was running it, it was novel to them. Talk about that, actually expand on that, because you guys have a remarkable team. Like, yeah, we interface with Felix a lot, we interface with Andrea on your fund side a lot.
You know, we’ve had to, we’ve talked with Stephen many times, but your guys, your guys’s team is fairly big. I mean, you guys have a pretty deep team, right?
Ezra Dweck: We have a big team, a deep team, and some really, really great people here. I don’t want to start naming people, because I’ll start missing people. And then other people feel bad.
But just mentioning the people that you talked through. Stephen Schwartz is our head of capital markets, does a really amazing job. David Jacob, who’s our head of our chief credit officer does a really amazing job.
And these guys have been on roadshows before. Whether it was at bond buyers or bond sellers. For me, it was, it was all new.
It was like a novelty. My joke was, hey, did you guys bring checks with you? How does this?
How does as end this meeting supposed to go? But the team is so Joe and I are super entrepreneurial. Right?
We were like, I don’t wanna say cowboy ish, but we’re grow and, and business focused. We wanted people who were super credit focused, who were really had the deep institutional Wall Street knowledge that we now have. Andrea is amazing in terms of like, in terms of having an institutional fund, and social quality fund and being able to produce reports, and, and relationships with investors, from when we just had a 20 something million dollar fund to where we are today, which is in the how many figures, seven, eight, nine, nine figure fund, that’s, that’s raising money every, every quarter.
We invest a lot, we knew where we wanted to get to. And we always look at ourselves in startup mode, and say, Okay, where do we want to be? And how much we have to spend to get there?
We said, we’ll make the investments early and grow into them, which I think we’re still growing into we have 130 people now. So like, David, at the time left, left track to come here. We got, you know, we had, we had a great relationship with Turek, we had Sean Beachman, who was okay, not separate, we didn’t want to step on any toes, we knew David was gonna leave, we said, we’d love to credit mine here.
And moving from a place like Turek, KKR owned firm to like, I want to say a small, a smaller at the time originator. It was, I’ll say somewhat of a mismatch, but he knew, and we knew where we wanted to get.
Kevin Kim: And that’s overlooked in our space. A lot of folks are reactive hiring, right? So hey, we have we’re doing these, these and then we need to hire, you’re telling the audience, hey, we hired first, we know where we wanted to go, and we hired the team that we needed to get us there, because the resource drag otherwise is not going to be there.
Right? If you don’t have the skills, you don’t have the skills to grow, basically, you need those skills. Yep.
Right? Skills, particularly.
Ezra Dweck: And when when you do things that should be hard, there, you feel like, oh, it’s not hard, but it’s hard, just because we’ve spread that that pain over paying for it for many years, our team is phenomenal, you know, whether it’s our sale, our heads of sales, our heads of our chief lending technology. Our tech team is like out of this world. There’s something that’s overlooked as a lender, we spend a lot on technology and data and AI.
And there’s, I’d say they’re like, again, we think of ourselves as a startup, but we make money every year. But we’re willing to reinvest a lot of it in what are we going to be and how are we going to stay relevant?
Kevin Kim: And in two years, three years, four years down the road, let’s talk about the so what you guys are working on that because you’re building and building still, you’re still in growth mode, right? And so, you know, the market is trying, right? There’s a lot of, I guess you can call it stress in RTL right now, and in private lending in general.
What are you guys working on going in? It’s still, you know, we’re entering the middle of 26, going into 27. What are you guys focused on for yourselves?
Ezra Dweck: So I’ll just say that we are, Doug Roberts, the Chief Revenue Officer says we’re growing in a declining market. So we’ve been we’ve been up between 40 and 50%. I think for 2024, we were up 50, 40, 50%, or 2023, 2025, up 40, 50%.
And 2026, we’re up somewhere in that 40 to 50% range so far. Don’t know that’s going to continue, who knows. But last year was our first year over a billion, over a billion at a billion one.
This year, this year, we’re on track to beat that, hopefully by again, that 40, 50%.
Kevin Kim: That’s a huge milestone to hit that annual amount. And is that still like, concentration is still Northeastern quadrant of the country, but you guys are now have to be expanding.
Ezra Dweck: We are expanding. We’re doing a lot. We’re doing a lot of expansion, we’re opening up offices around the country.
We have people that are moving around. We have a so this talks about like what we’re doing. We have we have a we went from being a bespoke shop with magic money of hey, whatever Joe and Ezra want to do, we’re going to get done to a machine that originates loans.
So we have we have those different areas of the business where you have the bespoke loans that yeah, we can do that. Joe and Ezra want to do it, we’re gonna do it to the DSCR type loans, which I’m going to say like the most widgetized loans, which like with a super clean process represents a box. So we have a broker portal, where we have 7800 brokers a month now coming on our portal pricing out DSCR and now bridge loans as well.
Systems in place that are supposed to be like, second to none there. We’re building out in a meaningful way the technology for our in house, our in house origination team to really be able to be efficient at what they do be smart about what they do, and have the most seamless process possible. And then we’re spending a lot on an IT build out along with it with data infrastructure.
So for us, I would be able to click a button and see, okay, yeah, find me find me this borrowers experience as an example, get everything in all of the data that we have public data. So we’re spending a lot in AI automations, things that people shouldn’t have to spend their time doing free them up to do things that are more productive and thoughtful and where you want a human interacting.
Kevin Kim: Look, that all points to a lot of infrastructure build out, right to support that goes to your point earlier, like you guys are in that growth mode on the loan side. But you’re investing all your investments seem to be on infrastructure. So that’s very interesting.
That’s a very good thing to do, I think, but like, and it sounds like to me, at least the thesis is that we can’t support the inbound loan request that this isn’t if those if the machine isn’t running well, it needs to be there, it needs to be there.
Ezra Dweck: And if it’s not, you’re just going to break down, right? So you’ll you can if you build it, they will come philosophy is there. So great, we have a great stadium, they’re going to come and build it, you don’t have seats, and you don’t have ushers, and you don’t have everything that needs to move the people around and get loans done, have the communication there without stressing everyone out, borrowers, brokers, originators, our processing team, you want to have as much automated as much clean and clear as possible.
So that’s what we’re trying to do. We also don’t want surprises down the road. So like our, that’s our like the underwriting training, the underwriting automations, the clarity with our from our underwriters to our brokers and originators of Hey, here are the problems on this loan, here are the conditions, there shouldn’t be surprises later, every time there’s a condition that pops up later in the game.
For us, that’s like, something we need to look at and say, Hey, how did this happen? We want to have as much communication as early as possible. And for us building out the teams that we are those internal things that we care about the valuation team, the deep dive team, where as soon as a loan comes in those things, if they’re going to be an issue should come up really, really early in the process, which means it has to be fast, it has to be really fast, especially if you have to over set.
So we’re hiring more in house appraisers now to get that stuff done.
Kevin Kim: That’s also something that’s overlooked, right? Like it’s been the discussion point that goes to kind of, I guess, market conditions and future perspectives. But like, this whole this this whole this past year or so now, like the industry has been obsessed with valuation, valuation, valuation, and the companies that I know that do it well, that don’t have these problems all have someone in house, right?
That actually was one, right. And then they also have a bunch of systems and processes and tools and research and all that stuff, to gut check everything. And it’s not like you’re doing all that here.
Ezra Dweck: So we’ve been doing it for a long time. And we’ve had it in house. And it’s helped us avoid a lot of problems, where we’ve seen the issues come up is not that we have the wrong valuation.
Like the appraisal says it’s worth a million, we said the thing is worth 700. We don’t want to do it alone. That we’ve been really good at.
We know that we’ve avoided that type of thing. The issue is doing that really fast now. So for us, it’s like, okay, you got the appraisal in here’s where they think the value is, I want to tell them really, really quickly, we don’t agree.
Because if it takes a day, you gave it to us yesterday, here’s today, it’s Monday, you gave it to us Monday, it’s Tuesday night, we have a problem. Let’s talk it through.
Kevin Kim: We can either lower the loan, you can bring it somewhere else to get the bad news fast, right? Because keeping that borrower sticky is hard today, right? Because he’s guaranteed he’s gonna shop it as fast as he can.
Ezra Dweck: And we don’t begrudge them the ability to shop it. And if the and if the broker or doesn’t want to shop at our in house originator, it’s a discussion to have with the borrower early say, hey, you know, the internal valuation isn’t agreeing with what you’re what you were doing. Until recently, I don’t give an exact time until recently.
Other whether it’s brokers or borrowers, they say, hey, nobody else cares. We want you to know you guys are doing this. Nobody cares.
I will take this appraisal, it says a million. And you guys are saying it’s worth 700. I’m not saying I disagree with you.
But I will go out and I’ll get a $750,000 loan on this. And we would say, we appreciate that no one cares. But you know, this is why we’re growing more slowly.
Kevin Kim: For the broker. It’s great for the lenders. It’s massive, massive problem.
And that seems to be that seems to be a pervasive issue right now.
Ezra Dweck: And so it’s not even for the lenders. So for lenders, it’s an issue. For originators, it’s not.
And I was on a panel with an originator who said, my job is not to figure out credit. My job is to fill a box. I’m paraphrasing.
And I think the exact words were if the sun is shining, make hay. And if I have the appraisal, I have the CDA, I have a credit report, we’re figuring out how to get a loan done. And I appreciate that.
But for a broker, but but that’s there. There you I wouldn’t call them a lender, though. They’re a broker.
Yeah, that’s the I, I guess I’ve been they’re the originator on file of the deal, right? They’re putting up the money selling it off. 100%.
Kevin Kim: But what they forget is, hey, in RTL, especially in DSCR for sure. Buyback is now a thing. Have you forgotten?
Like it’s one of those things, where especially the older originators, they kind of forget the buybacks a thing. And it’s not like at one point in this lifecycle, it was ignored almost. Today, it’s not.
And so like, you could do that.
Ezra Dweck: So I think I think this one that I’m thinking of was a more extreme example, where they were going to get volume build up really quickly, make a bunch of money, if I back becomes a thing in two years down the road, okay, great, you know, we’ll do it again. You know, so set up a new shop and do it again. But I think that some of the other guys like the real established players who are now talking more about credit and more about valuations.
I’d say many of them felt that buyback wasn’t a thing. And in their mind, it really wasn’t right. Because for many of us, and we didn’t do it, because we didn’t want to have buybacks necessarily.
For us, it was like, we want to be the right lender, we want to go and have partners that we’re working with and tell them we act like this is our money. And our performance should be better. And here’s what we’re doing.
And we’re showing them, okay, here’s our valuations. Here’s our background checks are supplementary background checks. But we weren’t so worried about about buybacks, because you have this EPD risk that burns off.
But now people are finding out that that’s not where it ends. So people felt like once I’m past three months, everything is fine. And then they find out, hey, you know, there’s a there’s a there’s a whiff of fraud in the air.
And those fraud reps are pretty broad.
Kevin Kim: And that’s the problem, especially RTL. It’s a lot of I mean, both yes, it’s fraud, right? Fraud is the problem.
And so and there’s so much fraud. So like, okay, well, that’s what a lender would the lenders mission, and we’re using the lender originator differentiation, the lender, his mission is to sniff that out. Right?
Because he’s acting as if it’s his loan, and it usually is his loan first. Right? And so you know, it’s a I view it as a reputational issue.
Like, do you want to be known for selling dog shit? Do you want to be known for that? I don’t think that anyone does.
Right? So but there’s some that don’t that view it that way. And that’s a different perspective, I guess.
So going into the rest of this year, I mean, first quarter of the year was tough for everyone, it sounded like, but it’s getting a little better. What’s what’s the what’s the outlook for you guys going to the rest of the year? How do you feel about the market?
How do you guys feel about private lending as a whole?
Ezra Dweck: So first quarter for us, again, was pretty strong. I’ll say the first third of the year. That’s great.
That’s not that’s not the truth for most lenders right now. Up 45%, both in terms of dollars and in terms of units. So I think it speaks to that we’re doing some things right.
Yeah, definitely. So look, I think that for the market, I’m not super bullish. Right?
I don’t think our overall space is going to grow. I think it’s going to stagnate a bit. I’m concerned a bit about the the the traditional lenders that are coming into the SCR and some of them are going to be coming into RTL.
I think that’s going to be more of a thing, right? They’re going to try. They’re going to try and RTL.
We’ve spoken to a couple of them who said, hey, you know, we have these big lending shops. It’s all either non qm or direct to consumer that we like the SCR. We’ve been doing okay with that.
We want to do RTL now as well. So it doesn’t mean they’re going to succeed at it. But it does probably mean they’re gonna put out a lot of money.
They’re going to try very hard. You’re going to put out money. So they might get some of the suckers money, which for us, you know, doesn’t necessarily what’s up.
Look, just because just because it is written as a bad loan doesn’t mean it has to have been a bad loan. Someone’s doing a hunt like the borrowers will take as much as you’ll give them, give them 90 and 100 to 75 ARV probably work out if you give them 110 and 100 to like an 83 ARV. You know, they’re going to be the compromise situation if the market doesn’t go if not everything was exactly the way they want.
So I think that that’s going to there’s going to be stressed there. I’m excited about the about a lot of what’s happening in the space. I think the securitization is a great equalizer.
Right? So there’s this new idea that I think about as big enough in this space. Right?
If you’re number one, number two, you’re doing securitizations, you’re doing a rated securitization or even an unrated securitization as number 1718 1920. Your cost of capital looks very much like what number one and two look like. But for that RTL securitization, so like that’s once you’ve hit the plateau, there’s not much better capital you’re getting elsewhere.
So I think that that’s going to be exciting for for lenders in the space. I think the technology that’s coming to the space is going to be great. There was a lot of money that was spent by some of the leaders in our space in terms of tech.
Now it’s going to be a game of wishing what your tech is going to be. There are new providers coming out that have some really, really interesting technologies that are going to be available for everyone. Ls is we’re not good using it just because our system is way too complicated.
But we’re excited to grow and we’re doing a lot of vibe coding and other things that really help us enhance what we’re doing in really, really fast ways in ways that are much cheaper than where they were before. Let’s see what else am I thinking about for for 2026. Continuing to have that committed capital and this is a plug for you every time I come to one of your conferences, I know that there are lenders out there who are going out and raising money.
So as the the the true simple widgetized RTL space becomes like super commoditized, there’ll be opportunity for loans that need thought. And guys that are going out and coming to you and raising 10 2030 40 $100 million anywhere else line alongside of that and doing something in a market that they know really well.
Kevin Kim: And in a category they know, well, I think it’s really just a it continues to be a strong opportunity goes to that argument as a conforming and non conforming in our sector seems to be a real thing now. Right. And so like, there’s some real legs to non conforming loans.
In RTL, there’s a lot of story based on that are good, great loans to be done. You just won’t hit the box.
Ezra Dweck: So I’ll tell you where I am concerned. I’m concerned about the chase to just like forgetting about who’s coming in and the outside the real estate not going up the way we would hope it would go up to kind of fix mistakes that we make along the way. Not gonna talk about fraud, but I do want to talk maybe or maybe later, but I do want to talk about just this, this LTV chase.
So the 90 and 100 were something that were that was the standard, right? Like 90 100. Now the question is rates and, and like how good of how good your execution is, it shifted to 100 and 100.
So on the one to 400% of your purchase, and 100% of your rehab, up to 75 LTV for qualified sponsors, which I don’t want to say I didn’t agree with, you know, it took me a little while to say how comfortable I am with that and how good of an idea it is sometimes it’s not as well to people to do a lot of it. Like, look, the numbers don’t lie. And I agree, the numbers don’t lie.
You then have this idea of over 100 and 100, where you have someone who’s buying something for let’s say $200,000, you’re giving him or her the full 200,000 plus closing costs, plus 20% of their rehab budget upfront, and building to a 75 or 80 ARV. And I think it’s probably okay here and there. I think it creates these perverse incentives for growth for some of these sponsors where they need no money at all.
And they could just grow until there’s a speed bump. And then they implode.
Kevin Kim: Well, we saw that happen in Austin. So it’s, it’s already being told, right? That story is already being told.
I mean, Austin had a 25% devaluation to one to four family. You don’t think that’s going to cause all that all that kind of paper to go belly up? And it’s going to, right?
Ezra Dweck: And Austin’s an outlier. Yeah, look, even if things are chugging along normally, right? This guy has to either has to make payments, doesn’t have to make payments.
But if anything goes wrong, and there’s a liquidity issue, or like the guy ends up in the hospital for two months, or whatever it is, his subcontractor quits. And is it that scary if you’re incentivizing this overreach? Because it’s all OPM at that time all other people’s money 100% no scaling game at all, at all.
Kevin Kim: Yeah. And you’re not the only one to say this. I mean, every balance lender that I know, whether or not they interact with the secondary is complaining about this issue.
Ezra Dweck: The problem is that, you know, at least for the hundred hundred, some of the guys who have spoken to who said, Hey, we’re being disciplined, and doing the 90 and 100. But we’re getting the adverse selection of worst borrowers, because the better borrowers will get the hundred. And even though it might not be good for them, in reality, they still want it, and are willing to take it.
Kevin Kim: Yeah, the the hyper competitive nature to acquire those top tier borrowers, it’s just gotten out of hand. But you know, that’s, that’s kind of the nature of the market in the context of how frothy it’s gotten. I don’t, I don’t know how long that’s going to last, considering all the stuff that I’ve been hearing upstream, what capital is doing, what capital is concerned about, but you know, it’s gonna take some time for that to register.
So like, but it always does. Yeah. And but there is meaningful, meaningful concern upstream.
And so yeah, I guess, you know, it, it’s a story that hasn’t been told yet. But I think, come this time next year, I think it’ll be a big shift. I don’t know that we’ll be seeing 100 100 next year.
Ezra Dweck: You know what I mean? So and I’ll tell you something else interesting, the 100 100 system, and this might be breaking news, you can tell me if it’s if it’s not, it is is manipulated. So to the point where originators and some of the bigger shops will call up a borrower and say, Hey, you don’t qualify for 100 100.
But if you sign up with this mastermind program, this lender has this deal with the mastermind that you’ll get 100 100. So it’s kind of like nothing changed with the lend with that borrower.
Kevin Kim: That allows them to give the it goes to borrower experience credit, almost and creating these weird credit programs being associated with this Rio or that Rio and that it’s has no bearing on the actual borrower’s performance, right?
Ezra Dweck: I’m sure it works when you look at things in retrospect, right? Like, hey, how did guys who were in this cohort do? But now just trying to like change my name and fit into that cohort.
Like everyone named Kevin Kim is an is it is an amazing securities lawyer, just because I changed my name to Kevin Kim doesn’t make me a great securities lawyer.
Kevin Kim: No, that’s the funny part, right? And that and it’s not, it’s, it’s, it’s almost like it’s a underwriting for underwriting sake, almost just kind of checking that box. And it’s been an S that’s the that’s the pain of mortgage over overall, right?
We saw the same thing. In commercial, we saw the same thing in wonderful family and conventional, we’re seeing the same thing in RTL. It’s really hard to, it’s hard to watch.
But I mean, the nice part is this market also is so fragmented, that I think that we’re more resilient for it, because there’s people are the market is so it’s so diverse, right? There’s so many ways to do this kind of lending. And so that’s, that’s the beautiful part about this industry is that there’s no formula, per se.
And even the big shops, they’re all very different in how they do business, you know, I think we’re running out of time. But this is I mean, I lost track of time. It’s always great to talk with you, Ezra.
Tell our audience where they can find you guys how to get ahold of you guys and who to get a hold of and, and, and all that.
Ezra Dweck: Okay, you can find us online at icecapgroup.com. You can reach out to me at Ezra at icecapgroup.com. And I’ll just send you over to the right person who you should speak to in the company.
Or you can reach out to Kevin, if you want to invest with us, and he’ll send you over to our investor relations team. Yep. But otherwise, it’s great talking to you, Kevin.
Absolutely. Always a pleasure. And thank you for coming on.
Kevin Kim: I really appreciate the time. I know you’re very busy. And it’s late in the day over there.
So thank you for doing this. For to our audience. This is a our episode with ice cap.
And if you haven’t listened to their stuff before, this has been a great episode. And look out for them. They’re coming to your market if you’re if you’re if you haven’t heard of them.
Ezra Dweck: And we’ll also buy your loans if you know your DSEO loans. Well, it’s a little table fund for you. So you don’t need to look at us a competitor.
There you go.
Kevin Kim: All right, guys, that’s all the time we have for this episode of Lender Lounge. Kevin Kim, this is Kevin Kim signing off. Subscribe to Lender Lounge on your favorite podcast platform and visit our website, PortraLaw.com to learn more about how we can help you scale. Check out the episode summary below for other valuable resources.