Silverstein Properties is looking to double its lending business next year to more than $1 billion.
The firm is focusing on inventory loans in the luxury condo market at neighborhoods such as Tribeca, Gramercy and Midtown East, according to Bloomberg. The firm is in negotiations for roughly $700 million worth of such loans, which are generally used as temporary lifelines for developers looking to pay off construction debt without lowering prices while dealing with slow sales. It can let them remove equity from projects earlier as well.
Luxury developers in New York are now facing strong loan repayment projections in a market that is slowing down.
Silverstein formed its lending unit last fall and debuted with $240 million of mezzanine financing for JDS Development Group’s project at 9 Dekalb Avenue in Brooklyn. It has completed about $500 million in financing so far.
“Our goal is not to lend to projects that fail: We’re in a position where if a project has a problem, we believe that we could execute the business plan and we could finish the construction,” Silverstein president Michael May told Bloomberg. “We think that there’s still demand for units that are priced well, but in many cases, the owners of these projects have not adjusted their expectations to where the price would sell in the market yet.” [Bloomberg] — Eddie Small