Northwind Group this month originated $105 million of new multifamily-oriented financings, stepping into situations in which sponsors might have otherwise worked with bank lenders.
The firm originated a $70 million condo inventory loan on behalf of developer Southern Land Company on The Laurel Rittenhouse Square, a luxury apartment-condominium property in the city’s tony Rittenhouse Square submarket. Northwind also originated a $35 million first mortgage on Carmel Towers, a 25-story, 216-unit multifamily property in Newark, New Jersey.
“The biggest issue we are seeing right now is there is a really serious shortage on the senior part of the capital stack which is developing into a credit crunch,” Eliasaf said. “We are providing these bridge loans to a much higher caliber of sponsors than we would have done three years ago. At that time, those sponsors would have been able to get a bank loan but because of the current situation, they are turning to private lenders.”
As a result of the shift, the firm has deployed more than $1 billion of capital over the past 12 months, which Eliasaf said makes the period the most active ever for Northwind. These loans, as well as the other loans it has originated this year, fall solidly into Northwind’s thesis of lending on residential property in strong locations where there are supply constraints.
The 48-story Laurel Rittenhouse Square is the tallest residential complex in Philadelphia, with for-rent multifamily on its lower floors and 65 for-sale condo units on its top floors. The sponsor has closed more than $154 million in condo sales at the property and the residential component is about 90 percent leased, Eliasaf added.
“It is a super high-quality building in a prime location in Philadelphia with a really good sponsor,” Eliasaf said. “The building is done, units are already sold and for us it was a very easy execution. We are comfortable with all components of that transaction.”
Newmark arranged the loan, with King & Spalding representing Northwind on the transaction. The multifamily component was financed separately.
Meanwhile, Carmel Towers, which is undergoing extensive renovations, is in a similarly supply-constrained situation.
“There is such need for workforce housing around New York City, where there is a general lack of supply and housing. Buildings like this will offer a really nice quality but very affordable pricing,” Eliasaf said. “We are working with a good sponsor on a building with good bones which is undergoing a gut renovation. It will be like a new building when it comes back online.”
Meridian Capital arranged the financing, with Polsinelli representing Northwind. The sponsor is 440 Elizabeth NJ Urban Renewal, headed by Yisroel Berger.