Eastern Union is planning to bulk its transaction volume via more $50 million-plus deals to sustain the brokerage shop’s momentum under the leadership of its recently-installed president and chief executive Abe Bergman.
The New York-headquartered commercial mortgage broker is framing its 2022 growth picture around large structured deals and blanket multi-property deals, according to Bergman, and it is looking beyond multifamily for more opportunities to connect borrowers to lenders.
Eastern Union penned $4 billion in new origination volumes during 2021 and is targeting a 20 percent increase to that figure as part of this year’s growth plans. The national commercial mortgage brokerage firm drives the majority of business by facilitating relationships between borrowers and savings banks, insurance companies, institutional, agency, balance sheet and Wall Street lenders.
Bergman told Real Estate Capital USA his firm has seen a slight shift in its deal profile wherein multifamily is not as relatively dominant as an asset class because more interest has cropped up in industrial and hospitality deals.
Multifamily accounted for an estimated 60 to 70 percent of Eastern Union’s book of business previously, but now constitutes about 50 percent of all brokerage business as office, retail, industrial, healthcare and hospitality signings have picked up pace.
“Multifamily is still growing and it is still very sustainable, but we’ve also seen growth in other asset types,” Bergman said. He noted the firm’s clientele are expanding into multiple asset types atop their geographic expansion with some multifamily specialists now considering hospitality or industrial deals for widening their portfolios.
To supplement Eastern Union’s current multifamily presence, the brokerage shop has directed more attention toward mobile and modular home markets typically ignored in the wider multifamily conversation.
Eastern Union has also placed more resources toward bolstering its hospitality business even after the sector became the “least financeable product” during the pandemic, according to Bergman. “Hospitality finance really came to a standstill and in the beginning of 2021, we started seeing some lenders slowly dipping their feet into the water and trying to get back into that space,” he said.
The dip back into hospitality waters has only continued in Eastern Union’s experience and Bergman said borrowers are relying more on brokers to help them out because of how tough it can be to get deals within the sector financed. Hospitality lending specialist Charles Hoffman was brought on to helm Eastern Union’s own hospitality group when it launched in October 2021 with the firm looking to help finance more hotel and short-term rental property deals across the US.
Transaction frequency and volume is top of mind for Bergman beyond the asset class priorities. He said the firm wants to increase the clip of deals Eastern Union is involved with, which in turn will fuel revenues and overall business size.
Bergman said Eastern Union is seeing a strong market with a lot of capital out and available, opening the potential for bringing in mezzanine financing or bridge loans to produce more structured deals.
He said with interest rates rising, brokerages are having to be more creative to get deals across. Notably this week, Federal Reserve chair Jerome Powell indicated a 25-basis-point interest rate increase was on schedule in the next two weeks, keeping with the anticipated pace the central bank had previously outlined.
Eastern Union – akin to other commercial real estate debt players – is keeping a pulse on inflation and its interaction with rental rates to ensure current business strategies can withhold against any market turbulence.
He noted the Russo-Ukrainian conflict is also top of mind in relation to macro events affecting US real estate assets directly or indirectly. “Nobody at this point can tell us how what’s going on in Russia and Ukraine is going to affect the markets locally,” he said.