Silverstein Capital Partners closes $2bn lending, rescue capital fund

The firm seeks opportunities that are not treated efficiently in the capital markets.

Silverstein Capital Partners has closed a $2 billion fund that will target a variety of lending and rescue capital opportunities on major product types in urban markets across North America.

The company, the lending arm of New York-based Silverstein Properties, raised the fund from two existing and three new global institutional investors, according to Michael May, president of Silverstein Capital Partners.

Silverstein Capital Partners is a balance sheet lender that aims to originate large loans on property types that are not treated efficiently in the capital markets, with May citing opportunities in condo inventory and condo construction loans.

“Our core strategy is to lend on the kind of properties that Silverstein Properties would build. They are expanding to major markets and we are moving in lockstep with them in terms of seeking out opportunities in markets that we think have high growth,” May said.

The fund is the company’s third, with May noting the firm also has separate accounts. “This is an expansion of the strategy,” May told Real Estate Capital USA.

Silverstein Capital Partners invests in the 10 largest US markets as well as high-growth markets where Silverstein Properties is identifying opportunities, such as Denver, Seattle and Austin. Its long-term relationships with investors allowed the company to be active through the pandemic.

“We were writing mezzanine loans during covid and we were also able to buy high-quality loans from mortgage REITs, which wanted liquidity at a time when their stocks were trading well below their asset values,” May said, noting the firm was able to acquire the mortgages at a slight discount. “It was a good transaction for them – it was smart – and it was a good transaction for us.”

Lending profile

Since its inception in 2018, the firm has committed $2 billion to US commercial real estate transactions, with a focus on construction and condo inventory loans. With the closing of the fund, the company has raised a total of $4 billion.

The company is a balance sheet lender with a portfolio that includes a $340 million whole loan on Miami’s Legacy Hotel & Residences, a mixed-use property that includes condo, hotel, office, and retail space, which Silverstein Capital closed in December. In April, the company originated a $700 million whole loan on the Avenue Bellevue, a mixed-use condo, hotel and retail property in Bellevue, Washington.

The company originated its first loan three years ago, with May noting there are natural synergies between the lending platform and the full-service commercial real estate business of Silverstein Properties. “Our access to Silverstein’s in-house design, development, construction, leasing and asset management resources allows us to efficiently underwrite and bid complicated projects,” May said.

Since originating its first loan – a $250 million mezzanine loan on a Brooklyn property – the company has been flexible on its structuring. “We are flexible on our structuring. Also, because we are not a bank, we don’t get charged for regulatory capital treatment,” May said. “One of our competitive advantages is that we can originate at scale and that we tend to hold all or a significant portfolio of the loans we originate.”