Scott Singer, co-lead of Avison Young’s Tri-State Debt & Equity Finance Group, says that for the first time in a generation, New York is on sale. But while capital is abundant, it is highly discriminating, and lenders are cherry-picking high-quality transactions.
After the massive disruption caused by covid-19, New York’s real estate market has struggled to return to its pre-pandemic levels. While there’s been an uptick in the multifamily sector, the once high-flying office market continues to struggle. The resulting dip in pricing has given new opportunities to buyers who would have been otherwise shut out of New York.
“I am a firm believer that we will get through the pandemic. People like living in dense urban locations for a reason,” Singer said. “For every market participant who gives up or leaves, there are multiple offers from those who were priced out of New York. And as soon as you could feel safe from a medical perspective, tenants came back in.”
Singer, who joined Avison Young last month via the brokerage firm’s acquisition of advisory boutique The Singer & Bassuk Organization, said that his work has in part been focused on working with borrowers to think more like lenders.
“Some owners are realistic with regard to financing,” Singer said. “There is more realization that the lending community doesn’t participate in upside when a borrower makes a deal. Either the lender gets paid everything they expected at the beginning of the deal, or it’s a disaster for them. When we go out to arrange debt, we are focusing on the argument of how the lender will get paid back in full through the thoughtful construction of the capital stack and reserves.”
A case in point is a loan that Singer structured during the pandemic on a nearly 1,000-unit apartment development in Long Island City. The business plan called for the units to be leased at a time when the covid-19 vaccine was just being released in the US.
“The package went out offering very large interest reserves,” Singer said, adding that the loan was also structured to be able to withstand a decrease in the expected velocity of the leasing. “If they leased at 25 percent of the velocity expected, the loan would still be good. We are helping borrowers to think from a lender’s perspective.”
Singer and his father and partner, Andy Singer, have found that being a part of a larger firm has changed the conversation that they and the rest of the former Singer & Bassuk team can have with clients. Singer & Bassuk’s client base has long consisted of many multi-generational New York real estate family offices, with relationships that go back to the 1960s.
“We have a new pitch where we can walk in the door and in addition to talking about our financing expertise, we bring access to a group of properties for sale with inside knowledge on them,” Singer said. “We are always pitching the great families of New York real estate, but now we are able to offer, in addition to asking.”
The decision to move was not taken lightly, with the Singers holding extensive conversations with James Nelson, principal and head of Avison Young’s Tri-State Investment Sales group and other senior executives to make sure that the firms would mesh.
“Over the course of more than a year, we got to see how the teams operate and collaborate. It was clearly the right decision,” Singer said, noting that his ability to work with and service his clients is augmented by the in-depth data and analytics that Avison Young provides. “This creates a platform for us that is rocket fuel under our reputation.”
Singer continues to see opportunity in New York, despite the current speedbumps that the city is seeing.
“I grew up hearing a mantra from my dad that every building that you see has a mortgage, and they’re all coming due within 10 years,” Singer said. “Part of my new role is getting the originators across all the business lines to remember that every property they’re working on has an equity investor who is going to need to refi soon – so we’ve evolved from simply capturing clients on our own to utilizing a broad group of market leaders as our de facto salespeople. We were brought in to continue what we’ve been doing on the finance side and grow it – and we’ve got all these incredible new people and tools to utilize to do that.”