TD Bank expanded its U.S. real estate lending by 9.5 percent in 2014, issuing $6.3 billion in new loans, in a further sign that major banks have regained their groove following the financial crisis. But while the Canadian lender is bullish on New York City as a whole, its head of U.S. real estate lending expressed caution over the luxury condominium market.
“That is not a market that we feel is deep,” Gregg Gerken, Senior Vice President at TD Bank Group and Head of U.S. Commercial Real Estate Lending, told The Real Deal. “It’s foreign capital that’s driving it and it’s a lot of reliance on foreign buyers as well.”
Gerken’s comments come at a time when major North American lenders have largely retreated from financing the city’s tallest uber-luxury condo towers, leaving the field to foreign lenders such as the Children’s Investment Fund and the Bank of China.
The last major luxury tower in Manhattan that TD Bank financed was Extell Development’s One57. The Canadian bank was part of a syndicated $700 million construction loan led by Bank of America that closed in 2011. Roy Chin, TD’s regional director for commercial real estate in New York, said that the bank chose to join in on that deal because Extell offered “alternative exit scenarios” if condo sales didn’t go as planned – such as conversion to rentals.
While TD is cautious on condos, it has been an active lender for multifamily projects and new construction in the Big Apple. The bank issued $2.75 billion in new loans for New York projects in 2014 alone (see chart above), almost half of its total U.S. deal volume. Its second biggest market, New England, was well behind at $1.18 billion.
TD’s recent commitments include a $50.6 million construction loan for the Naftali Group’s condo development at 261 West 25th Street and a $95 million refinancing loan for the Rabsky Group’s Leonard Pointe rental building at 395 Leonard Street in Williamsburg.