Online Lending Platform Taps Veteran Originator

Money360 is expanding its team to increase its share of the small-balance commercial mortgage market, as small and regional commercial banks face growing scrutiny from regulators.

By Paul Fiorilla, Associate Director of Research, Yardi Matrix

Ken Gaitan recently joined Money360 to lead the firm's
Ken Gaitan recently joined Money360 to lead the firm’s Western lending platform.

Online money lending platform Money360 has hired veteran originator Ken Gaitan to run the firm’s Western lending platform.

The Ladera Ranch, Calif.-based firm is expanding as part of an effort to increase its share of the small-balance commercial mortgage market at the expense of small and regional commercial banks that have been coping with growing scrutiny from regulators.

Gaitan has worked as a senior originator at a variety of firms, including Bank of America, Merrill Lynch, CBRE and Newmark Grubb Knight Frank, as well as emerging companies such as Thorofare Capital, PennyMac CREF and Johnson Capital Express.

Money360 focuses on loans of $1 million to $15 million on all property types across the country. The firm raises capital through partnerships with institutional investors and from accredited individual investors. Money360 was set up several years ago, but its lending operation took form last year when it hired long-time capital markets executive Gary Bechtel as president. Since then, the firm has originated nearly $150 million of mortgages.

Money360 provides both bridge and permanent loans, with bridge loans at 9 to 11 percent coupons on two- to three-year terms. The firm’s strategy has been to syndicate or sell the loans it originates to institutional partners, family offices and accredited investors. The firm also has an asset management subsidiary called M360 Advisors, which has raised $43 million to date for funding bridge loans. Minimum investment in M360 Advisors funds is $50,000.

The small-balance commercial market has traditionally been dominated by small and regional banks and credit unions. Money360 believes it can capitalize on factors that will limit those traditional lenders going forward. Local commercial banks are under pressure from regulators to moderate the proportion of commercial loans they hold on their balance sheets, which has led some to cut back on lending. Credit unions have a different issue, as their commercial lending portfolios are focused on syndications.

Gaitan said Money360 wants to take advantage of the niche of deals that are generated by brokers or borrowers and ignored by credit unions, or by banks that are becoming pickier about what types of loans they will provide. Money360 also wants to fund mezzanine loans that provide high yields for individual investors.

“Alternative lenders like Money360 will be instrumental in the current and next cycles,” Gaitan said. “There’s a lot of money that wants to be deployed but the infrastructure is not there to do it.”

In his new role, Gaitan will be responsible for the Western region’s origination pipeline, maintaining and building relationships within the broker and borrower community, and growing and sustaining Money360’s brand. He has originated and closed more than $3.5 billion in commercial real estate transactions during his career.

“Ken’s significant experience in originating small balance loans will be a key component in our continued pipeline growth,” Bechtel said. “As the CMBS market continues to contract and borrowers look for alternative lenders, having experienced origination professionals on our team will help us to meet market demand while maintaining our strong track record of performance.”

For more on the CRE lending market and Money360’s long-term goals, check out CPE’s exclusive interview with CEO Evan Gentry.