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 originated about $300 million in commercial real estate loans during the first month of the new year — nearly double the volume it generated during the same period in 2023, according to Al-Yaseef.
If this pace continues, Northwind is expected to lend between $1.5 billion and $2 billion this year, which would be a record for the nearly 15-year-old company.
“There's definitely some pain, some lost equity, some upside-down debt,” Eliasaf told MarketWatch, speaking mostly about commercial real estate financed in the past five years.
But since defaults are widely expected to continue to rise in office, multifamily and other sectors of commercial real estate this year as the debt wall matures, Northwind sees an opportunity.
Its focus is on originating loans with “cash-ins,” or when the borrower comes in with new equity, putting more equity into the property. “This represents 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 variable-rate loans.
“However, the financing environment is much different today than it was when these loans originated,” James Corll, head of the private real estate group at Cohen & Steers, said in a recent report.
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Northwind recently closed a $70 million loan on 622 Summit Avenue, a new 29-story multifamily development in Jersey City, about five minutes from the New York-New Jersey train station.
That fits into Northwind's main wheelhouse: one- to three-year variable-rate loans mostly on multifamily and apartment buildings in New York City and in other major metro areas, especially for buildings near transportation hubs.
“We are typically 2-3% more expensive than a bank loan,” Elisaf said. “But banks, for the most part, are sitting on the sidelines.”
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The debt fund also selectively lends to other types of real estate, including office buildings, a sector that many other lenders avoid. He added: “The negativity in office has gone beyond the limits.” “Some deals make sense on the right basis.”
All of the loans Northwind has originated so far are working efficiently, Eliasaf said, adding that it has not yet booked any assets.
