COMMERCIAL REAL ESTATE | THE 30-MINUTE INTERVIEW
By VIVIAN MARINO | AUG. 7, 2012
Mr. Procida, 50, who goes by Billy, is the president of Procida Funding and Advisors, based in Englewood Cliffs, N.J. The business provides real estate services, including financing and investment funds.
Mr. Procida is best known for his development work in the South Bronx.
Interview conducted and condensed by
Q. You wear many hats at Procida Funding and Advisors: lender, investment banker, developer and consultant.
Q. Is there an area where you are most involved?
A. I do more finance than I do principal development. I sold half of my development business to my brother.
I realized that with the intuitive skills that I had — if I couple that with money — I could nurture all these other developers. So really what I am is an incubator. I’ve got guys doing two-family homes in Paterson, N.J., now buying 50-unit apartment buildings.
Q. Are you more of a subprime lender?
A. I wouldn’t say subprime. I would say value-add. We fill the void that the bank doesn’t fill. Most of my people are either in trouble, trying to get out of trouble, or they have an opportunity and they’re trying to capitalize on it. We can’t start robust construction until we finish all the half-builts.
Q. Are half-builts a focus of your company?
A. My specialty today is half-builts; some I develop, but predominantly I’m a lender that is arm in arm with the builder.
We try to save builders that got in trouble. So we’re doing one in North Bergen, N.J., that was half built. We just did an office building in Freehold that was 90 percent finished and vacant, and we took it to full completion and 70 percent occupancy. We were the lender.
We also just finished a project in Union City. These were two buildings with boarded-up fence and broken windows. Across the street were a bunch of nice row houses. How sad that those people had to live across the street from this thing for three years. These poor people couldn’t refinance or sell their homes.
Q. What kinds of rates do you charge on your loans?
A. From 8 percent to the moon. It depends on how much risk you’re asking me to take. If you come in and the building has got 20 building code violations, the approvals have been pulled and the risk is this high, I’m expensive.
We provide capital and expertise, and the expertise is thrown into the rate and the yield.
THE 100 MILE FUND
Q. Where do you get the money to lend out?
A. We have a private equity fund — the 100 Mile Fund — that just started in October. We have about $30 million in positions right now. We have about 35 to 40 investors. Palisades, my prior fund, had 188 investors. We did $2 billion worth of transactions.
Q. What do you invest in?
A. Any asset class anywhere up to 100 miles from the George Washington Bridge. In the past decade we’ve done ski resorts, chemical plants.
Q. What kind of return do you expect to get, and what’s the minimum to invest?
A. We’re about to post: I think we’re going to net for our investors 15 percent.
The minimum is $100,000.
Q. Your first big break in real estate came in the Bronx.
A. I was the biggest builder in the South Bronx — my claim to fame.
In 1985, I was the only guy — the only one, with all the builders out there! — to respond to an R.F.P., or request for proposal, to build for-sale housing in Fort Apache. I won by default. I built thousands of units and a couple of strip centers.
I had to work with the gangs — they owned the South Bronx. I convinced them they could make more money in real estate than they could dealing drugs by buying houses and renovating. My dream is five years from now that a gang initiation is who can renovate a house faster.
Q. You started out as a building contractor, no?
A. I started as a general contractor. General contractors do 98 percent of the work and get paid the least in the food chain. So I went from contractor to a developer until I realized my bankers were making so much money, and my investors were making so much money and they weren’t even on the job.
My father was a strong general contractor. He did all the work and got screwed at the end all the time — either he didn’t get paid or when he did get paid he didn’t get paid enough.
Every developer should go to the site and work as a contractor. It’ll give them an appreciation of their project and their men.
Q. You also learned a lot about real estate from Donald Trump.
A. He gave the quote that I was his original apprentice. Trump brought me in during one of his toughest years, and I was a vice president there. I had a one-year contract in 1990.
Q. How did you two meet?
A. Well, there’s a funny story. When I graduated high school I started writing him letters saying: “You should meet me. I’m going to be a big developer one day.” Really cocky letters. He’d send them back saying, “Good luck.”
So this went on for like four or five years. And then New York magazine wrote this story called “The Boy Who Would Be Trump.” I was 23 and this was when Ed Koch picked me to redevelop Fort Apache.
So Trump called me. And he said, “So you’re in New York magazine.” I said, “Yeah, I’ve been writing you letters for the past five years.” He said, “Yeah, we thought you were a stalker.”