Dave Kotter is the CEO and President of Hybrid Debt Fund and Integrity Capital LLC, with over $2 billion in funded loans. He specializes in private credit solutions that bridge the gap between traditional bank financing and equity, offering innovative stretch senior loans that provide higher leverage while allowing sponsors to retain more control and equity upside.

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Key Takeaways

• Hybrid Debt Fund's stretch senior loan structure can finance up to 90% LTC, reducing equity needs.

• The fund is designed to fill the lending gap left by banks tightening credit in recent years.

• Dave evaluates deals based on the asset's fundamentals and the sponsor's track record.

• Higher leverage is paired with strict underwriting and active risk management.

• Building a first-time $50M fund required patience, strong investor relationships, and clear communication.

Topics

Bridging the Gap Between Debt and Equity

• How Hybrid Debt Fund's stretch senior loans combine aspects of senior debt and mezzanine financing.

• Why this model helps sponsors retain more equity without giving up control.

Filling the Financing Void

• Traditional banks have pulled back on CRE lending, especially for transitional assets.

• Private credit has stepped in to offer flexible capital for well-underwritten deals.

Evaluating Deals and Sponsors

• Asset quality, location, and market trends are weighed alongside the sponsor's experience.

• Emphasis on proven operators who communicate transparently and have a track record of execution.

Launching and Growing a Private Debt Fund

• Challenges in raising and deploying $50M for a first-time fund.

• The importance of selecting the right investor channels and delivering consistent reporting.

Risk Management at High Leverage

• Strong covenants, active monitoring, and conservative stress testing help mitigate downside risks.

• Dave's approach balances creative structuring with disciplined underwriting.

Make sure to download our free guide, 7 Questions Every Passive Investor Should Ask, here.

Round of Insights

Failure that set Dave up for success: Lessons from the 2008 downturn on managing debt and keeping margin in deals.

Digital or mobile resource: ChatGPT & PodPitch.

Book recommendation: Atomic Habits by James Clear.

Daily habit: Evening journaling to review the day, note wins, and set priorities for tomorrow.

#1 insight for launching a fund: Learn from experienced operators before you start—plan, then execute with discipline.

Favorite restaurant in Scottsdale, AZ: True Food Kitchen.

Next Steps

• Visit hybriddebtfund.com to learn more about Dave's lending model.

• Connect with Dave on LinkedIn for updates and insights on private credit and commercial lending.

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