Greystone expands construction platform with non-recourse stretch loans

The firm has closed a pair of loans that fit this profile, with a growing pipeline.

Greystone, a New York-based commercial real estate finance firm, has expanded its bridge lending business with the introduction of non-recourse stretch construction loans.

Paul Fried, a managing director at Greystone Capital Advisors, told Real Estate Capital USA the firm has already originated two loans that fit this profile and has another two in the pipeline. Greystone has additional plans to raise capital for this strategy, which is on track for about $400 million of originations this year.

“Non-recourse stretch construction loans complement our other construction loans and meets a need for our clients,” Fried said. “It is also an area in which we are seeing other lenders pull back, even though we’re seeing them be very aggressive in other areas. We are able to offer these loans to fill the void for these sponsors.”

Greystone started to look at this business after Fried and his team began fielding borrower requests for this type of financing. Although the firm didn’t offer a loan that fit this profile, Fried called CEO Steve Rosenberg and pitched the idea.

“I said, ‘We have a client that needs this but we don’t do this. We can provide an enormous service that will come back to us in spades,’” Fried said, adding that Rosenberg quickly gave the team the green light to move ahead. “We can be entrepreneurial, nimble and respond quickly to borrower requests.”

Greystone Capital Advisors has a 10-person team and fills three functions: arranging debt, originating loans as a direct lender and raising equity for owner-operators. The firm works with about 400 to 500 investment groups that include domestic and foreign pension funds, high-net-worth individuals, family offices and other institutional investors.

“We feel like we have a good line of sight into what the debt markets are like,” Fried said. “When we go to market with a large-scale project, we see what aligns with which group of investors and who the most likely participants are.”

Greystone Capital Advisors is active across all asset classes and looks at requests of $25 million to $400 million. Greystone tends to focus on owner-developers with larger assets or portfolios and will develop products that meet these borrowers’ needs, including the firm’s $3 billion bridge lending program.

The firm’s roughly $3 billion bridge lending program gained steam as Fannie Mae and Freddie Mac moved away from lending on newly built multifamily properties that were not yet stabilized during the covid-19 pandemic, leaving some borrowers scrambling.

“If you’re an owner expecting a takeout, the equity is sunk and your partners are expecting a return,” Fried said. “There was an enormous pipeline of developers finishing construction and getting certificates of occupancy with no avenue for financing, so stabilization looked a little trickier. We worked with our bridge loan colleagues to make bridge loans early.”

The firm is looking for other, similar opportunities as borrower needs shift.