Lender of last resort: Bay Point Advisors faces criticism from luxury property owners

Art magazine publisher Louise Blouin faced financial challenges in November 2022, leading her to secure a $62 million loan from Bay Point Advisors to stave off foreclosure on La Dune, her Hamptons estate. This bridge loan eventually grew to over $80 million due to a 24% default interest rate and late fees. The property, initially listed at $150 million, was sold for $89 million after an auction.

Blouin described her experience with Bay Point as a "nightmare" in New York bankruptcy court filings and is now contesting the lender for a share of the sale proceeds. Charles Andros, Bay Point’s co-founder and CEO, stated that they provide loans where traditional banks do not, highlighting a rising demand in the luxury real-estate sector due to stricter banking regulations.

Bay Point Advisors, founded in 2012 by former finance executives including Andros, has grown its asset base to $800 million. The company specializes in high-risk loans for luxury properties and has been involved in several notable transactions beyond lending Blouin $62 million. They have financed projects like Hampton Island Preserve and became equity partners in Aspen Valley Ranch.

While some borrowers appreciate Bay Point's willingness to fund deals when others won't, others criticize the company's aggressive tactics. Ronald Leventhal of Hampton Island Preserve claimed Bay Point complicates repayment efforts and seeks control of his project. Andros countered allegations of predatory practices as untrue.

Bay Point initially focused on fix-and-flip loans but expanded into luxury markets over recent years. Their approach involves asset-based loans secured by underlying assets such as real estate or other valuable properties. Although these loans come with high-interest rates, borrowers like Sam Banjee find them beneficial for projects that don't generate immediate income.

Despite criticisms from some clients who allege nefarious schemes or predatory behavior by Bay Point, Andros maintains that their practices are within legal bounds and aim to ensure loan repayment through asset sales if necessary.

Blouin accused Bay Point of manipulating terms and delaying processes related to La Dune's sale. She recently filed an appeal concerning how sale proceeds were distributed. However, Andros denied any misconduct by Bay Point during these proceedings.

Andros acknowledged hindsight might suggest different actions regarding La Dune's foreclosure but emphasized securing an assured $89 million was prudent at that time.