A lack of liquidity in commercial real estate financing markets is bringing more lending opportunities for private credit managers, especially as existing construction projects require more capital to reach completion.
The trend was on display this week with New York-based manager Slate Property Group originating a $142 million loan through its debt financing arm, SCALE Lending, to fund the last phases of construction of a Queens multifamily project.
Martin Nussbaum, co-founder and principal at Slate, told Real Estate Capital USA the lack of liquidity in the banking system has left private lenders as one of the main sources of leverage for borrowers.
“I expect further tightening and believe this trend will continue into 2024 as bank balance sheets continue to be secured and payoffs slow due to increased financing costs,” he said.
Scale finalized the floating-rate financing on October 17 on behalf of sponsor Joel Zupnick through Sutphin Boulevard Equities. The financing will fund construction completion, lease-up and stabilization efforts for the 521-unit, 24-story apartment building at 147-35 95th Avenue in Jamaica, Queens.
“We were attracted by the opportunity to work with an experienced and well-capitalized sponsor in Joel Zupnick and his project team, who have already topped off the superstructure of the building,” Nussbaum wrote in the firm’s press release.
The 30-month loan includes two six-month extension options and will help the development reach completion by its expected summer 2024 timing. Steve Hersko of SHB Group arranged the deal and the asset is notably on track and eligible for New York’s affordable housing 421a tax abatement.
Daniel Ridloff, managing director at Slate and co-head of Scale, said the debt financing arm is staying active in the multifamily space by offering a wide range of financing options that continue to make high-quality asset development possible.
“In today’s challenging capital markets environment, more lenders are moving to the sidelines due to balance sheet and capacity issues,” Ridloff said.
The asset will include a mix of studio, one- and two-bedroom units as well as amenities such as a gym and yoga room, children’s playroom, business center and conference rooms, rooftop lounge, game room, theater room and TikTok room – presumably for social media content creation. The lattermost amenity falls into the same bucket targeted toward attracting younger adult tenants, commonly including podcasting rooms, music rooms and the like.