Greystone maps massive affordable lending push after $500m Cushman investment

The investment will help to drive product development.

Greystone, a New York-based commercial real estate finance and investment company, is gearing up for a significant expansion of its affordable housing lending platform after selling a 40 percent stake in its agency, FHA and servicing business to Cushman & Wakefield.

Steve Rosenberg, founder and CEO, told Real Estate Capital USA that the transaction means that the firm will be able to create new products for borrowers in this part of the market and bring on new staff to bolster the effort.

The transaction was several years in the making, with Rosenberg noting that the stars finally lined up this year for Greystone to combine this part of its origination business with Cushman’s deal-making prowess. “The idea of selling a controlling interest to Cushman wasn’t appealing to us but I did like the idea of having an affiliation,” Rosenberg said.

After some back and forth, Greystone and Cushman came to an agreement that would allow the former to retain its nimbleness while bringing the latter a necessary expertise in debt origination so that it could better service its clients and prospects. “This allows Cushman to be more of a one-stop shop,” Rosenberg added.

Building bridges

Greystone sees a particular opportunity to expand its bridge loan origination business, where it’s already seeing substantial activity.

“There’s a big need for acquisition bridge loans where you [obtain] financing in the short-term and, once the property is in better shape, go for permanent financing,” Rosenberg said. “Historically, we were doing maybe a couple billion a year. We’re seeing half a billion to a billion a month in our requests.”

The firm’s bridge loan platform stands at about $4 billion, with Rosenberg projecting that this could reach $10 billion to $15 billion in the near future. Greystone deploys capital via its balance sheet as well as proprietary investment vehicles and is in the process of raising capital from pension funds and other institutional investors.

“Number one, we need to be providing acquisition financing for all of Cushman’s buyers, for all of their asset sales,” Rosenberg said. “And we need Cushman to be able to not just broker that financing but be right at the table with us. No one really just wants to be the broker to the lender; they want to be the lender. We’re talking about driving capital up and down the capital stack.”

Affordable housing focus

The firm will be expanding its team that covers the affordable housing industry, augmenting a platform that also includes America First Multifamily Investors. Greystone is already one of the largest developers and owners of affordable housing at a time when there is a real dearth of supply.

“There is a need for housing in the country,” Rosenberg said. “We’re definitely seeing that the agencies are showing a desire to do a lot more affordable housing than necessarily luxury housing.”

Greystone acquired the general partnership interest in the America First Multifamily Investors (NASDAQ: ATAX) based in Omaha in 2019 with the idea that the firm’s business of trading mortgage revenue bonds issued to provide tax-exempt construction or permanent financing for affordable housing, student housing and commercial properties also advances Greystone’s mission to lead affordable housing development and financing. This business is just one leg of the firm’s entire affordable housing platform, Rosenberg noted.

“In the coming years on the affordable housing front, it would be embarrassing to me if we’re any less than 30 percent of the entire [affordable housing] industry,” Rosenberg said.