Larry Silverstein’s recently launched debt platform sees a “financing gap” in the construction lending space.
The investor and developer earlier this year set up its first lending venture, Silverstein Capital Partners, which is backed by a sovereign wealth fund and a pension fund with “deep pockets.”
The platform will focus on shovel-ready, ground up construction projects, as well as heavy value-add repositionings, land and inventory loans on completed condominium projects. Silverstein Capital will get into the capital stack through senior loans, bridge loans, subordinate loans, and rescue capital with its billion fund.
“There’s a lot of demand for capital and there’s a lot of good quality assets being built, but maybe at pricing that we think is higher than we would want to operate,” Michael May, president of Silverstein’s new lending vehicle, told Bloomberg. “Those projects need capital, in a spot where we’re very comfortable lending.”
Silverstein’s new venture hasn’t originated any loans yet, but it’s looking to jump into the alternative lending space that’s proliferated in the wake of regulations placed on banks following the financial crisis. It’s also looking at projects in Seattle, Los Angeles and Boston.
Originations by alternative lenders grew by more than 40 percent in 2017 from the year earlier to nearly $60 billion, according to Green Street Advisors.
Banks are still the go-to source for construction debt, but Silverstein’s May said it’s an attractive place for non-bank lenders.
“Construction is one of the few spots where you can get to double-digit yields in this market as a lender,” he said. [Bloomberg] – Rich Bockmann