Churchill Real Estate has raised another $1 billion for its credit lending business, which has already put about $2 billion to work on residential real estate projects.
The firm, which specializes in debt, equity and distressed real estate, raised the funds for its warehouse lending arm, in which it provides credit to other mortgage originators, who then lend out to borrowers.
The business is focused on transitional residential projects, ranging from fix-and-flip investments to ground-up development.
Last year, Churchill raised $2 billion for the fund from foreign investors. Managing partner Travis Masters, who oversees the platform, said $1.9 billion of that pool has already been called up by the roughly 50 lenders the company is working with.
“We have the ability to be very competitive in the marketplace for this product,” said Masters, who added that the loans range from $100,000 to $100 million. “We can actually compete against banks and larger asset managers.”
Masters said demand is high for this type of financing, as investors and developers race to provide more housing. The warehouse lending model, he added, allows Churchill to lower the cost of capital.
Overseas investors looking for exposure to the residential market but wary of high risks can place their money with Churchill, which then turns around with a pool of low-cost money and doles it out to mortgage originators to make each individual loan.
Justin Ehrlich and Sorabh Mahashwari founded the company in 2014 to pounce on the flood of distressed real estate debt that hit New York City in the wake of the 2008 financial crisis.
The company had been eyeing the same playbook as New York’s bull run extended late into its cycle, with large inventories of unsold condos piling up and retail vacancies across the city. In 2019, Churchill started raising a $200 million fund targeting distressed real estate, but even through the pandemic the expected rush of troubled deals never came to fruition.
Masters said the company pivoted to where it is seeing strong demand — namely, in transitional residential markets.