Ran Eliasaf’s Northwind Group sees big lending opportunities this year in commercial buildings that need a short-term lifeline.
The Manhattan-based, real-estate private-equity firm and debt-fund manager has already originated about $300 million in commercial-property loans through the first month of the new year — roughly twice the volume it did over the same stretch of 2023, according to Eliasef.
If that pace continues, he expects Northwind to lend $1.5 billion to $2 billion this year, which would be a record for the roughly 15-year-old firm.
“There is definitely some pain, and some lost equity, and some debt that’s upside down,” Eliasaf told MarketWatch, speaking mostly of commercial properties financed in the past five years.
But as defaults are widely expected to continue climbing in office, multifamily and other segments of commercial real estate this year as a wall of debt matures, Northwind sees opportunity.
Its focus is on originating loans with “cash-ins,” or when a borrower comes up with new equity, putting more capital into a property. “That’s 90% of our loans,” Eliasaf said.
Real-estate investment firm Cohen & Steers recently estimated that more than 60% of all loans originated in 2021 and 2022, when short-term interest rates were near zero, were floating-rate loans.
“However, the financing environment is immensely different today than when these loans were originated,” said James Corl, head of the private real-estate group at Cohen & Steers, in a recent report.
Read: ‘No one is throwing good money after bad.’ Why 2024 looks like trouble for commercial real estate.
Northwind recently closed a $70 million loan on 622 Summit Avenue, a new 29-story multifamily project in Jersey City, about five minutes from the train station connecting New York and New Jersey.
That fits within Northwind’s main wheelhouse: one-to-three-year floating-rate loans mostly on multifamily and condo buildings in New York City and in other major metro areas, especially for buildings close to transit hubs.
“We are typically 2-3% more expensive than a bank loan,” Eliasaf said. “But banks, for the most part, are on the sidelines.”
See: Banks’ office-loan exposure remains a ‘mixed bag’ as lenders manage through downturn
The debt fund also selectively lends on other property types including office buildings, a segment shunned by many other lenders. “The negativity in office went too extreme,” he said. “Some deals makes sense at the right basis.”
To date, all loans originated by Northwind are performing, Eliasaf said, adding that it has yet to foreclose on any asset.
