Nonbank CRE lenders expect bumper year

Loan volume swells as developers seek bridge financing

National /
Sep.September 30, 2021 12:45 PM
Ladder Capital CEO Brian Harris (Getty, Ladder Capital)

Ladder Capital CEO Brian Harris (Getty, Ladder Capital)

Pressure on nonbank lenders reached a fever pitch during the pandemic as large real-estate securities portfolios made the companies look vulnerable amid the industry’s virtual pause.

Now, nonbank lenders are on pace for one of their biggest years for loan volume, analysts and executives told the Wall Street Journal. The sector proved resilient thanks to the Federal Reserve, which kept up lending and prevented banks from cracking down on mortgage finance companies.

Ladder Capital is one such company. Early in the pandemic, the company paid $100 million in margin calls to its funders, attempting to assuage concern about the company’s liquidity, leaving CEO Brian Harris in a work-from-home frenzy.

“I didn’t move from the chair in three days,” Harris told the Journal about the early days of the pandemic.

Since then, however, Ladder has been on a loan spree. In the second quarter alone, Ladder made $803 million in loans to developers, more than triple the volume of loans the company made during the same period in 2019, according to JMP Securities. Ladder worked on reducing risky repo funding during the pandemic, cutting its reliance on it among its funding by more than 20 percent since the fourth quarter of 2019.

TPG RE Finance Trust also returned to its pre-pandemic level of originating loans, people familiar with the matter told the outlet, and the firm is relying less on repo financing than in recent years.

Ladder’s financing moves have made recent headlines. Institutional investor Parmenter this week bought the Miami Herald’s former office building in Doral, Florida for $27.3 million using a $26.5 million loan from Ladder.

Earlier this year, Ladder helped a developer avoid foreclosure on two Midtown office buildings. The firm provided R&B Realty Group slightly under $51 million to pay off loans at 38 West 36th Street and 32 West 39th Street in Manhattan.

[WSJ]Holden Walter-Warner





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