BEB Lending, a Port Washington, New York-based commercial real estate finance company, has hit a major milestone for its debt platform with the origination of its first $100 million of loans, and it plans to exceed that in the coming year.
The mark comes after the firm, the lending arm of real estate private equity firm BEB Capital, hung out its flag in 2019 with the aim of providing a quick turnaround for borrowers with a need for creative financing solutions. “This is a really important milestone for us,” Keyvan Ghaytanchi, COO and president of BEB Lending, told Real Estate Capital USA.
BEB Capital launched the strategy as a part of a broader plan to expand its institutional real estate investment management business, Lee Brodsky, CEO of BEB Capital, told Real Estate Capital USA. Until the launch of the debt platform, the company had been an equity investor in value-added industrial, office and multifamily properties across the US.
“As an institutional operator, we are able to play on both the debt and equity side within the space and that is where we have been focusing our energy the past two years,” Brodsky said.
The company deployed $60 million of debt capital in 2021 and is hoping to allocate at least another $150 million to this segment of the market in 2022, Ghaytanchi said.
BEB Capital’s lending strategy is mainly focused on the industrial sector, but it is looking at more opportunities in the multifamily, mixed-use, office and retail sectors. It will also provide note-on-note financing and loans on other property types. To date, the company has completed transactions in Texas, North Carolina, South Carolina, New York, New Jersey, Connecticut and Pennsylvania, originating loans of up to $50 million.
When making a loan, the company is looking for strong synergies with its borrowers. This can be nuanced, with Ghaytanchi citing an example of working with a borrower that needed to move quickly to buy an asset out of bankruptcy.
“We closed a deal in 10 days last year but did full due diligence and didn’t cut corners. We just did it on a faster timeline,” Ghaytanchi said. “Ultimately, the borrower promptly took us out with cheaper money but that is a successful story for us. We had a $5.5 million loan on a property that, after the borrower executed its strategy, was probably worth $25 million.”
The company lends on any asset class in which it has any core competency. “We understand the industrial asset class really well. Anything we lend on, we need to have the ability to understand the asset class well and be helpful to the borrower,” Ghaytanchi said.
The growth in BEB Capital’s lending business comes as the firm also expands its equity platform, most recently via a $1 billion programmatic joint venture with Rockpoint Group. The venture will target a pipeline of properties in the Northeastern US, with a focus on properties in Long Island. The partners have put together a 660,000-square-foot portfolio of industrial properties to date, Brodsky said.
Over the longer term, the venture with Rockpoint could serve as a blueprint for similar platforms.
“The goal is for us to figure out what other asset classes we could potentially build a core competency in. We do have some asset classes that we have some exposure to and that would allow us to create other institutional partnerships,” Brodsky said. “The bottom line is that we are looking to continue to grow.”