The go-to lender for developers in 2024 didn’t exist 18 months ago. But in that time it has stormed onto the scene, seemingly backing every big construction deal out there.
TYKO Capital — a joint venture between debt broker Adi Chugh and billionaire hedge funder Paul Singer’s Elliott Investment Management — launched with little fanfare last August.
“They’ve raised a ton of capital to compete in the construction loan space, and they’ve done a really good job,” said Sam Charney of Charney Companies, who in July scored a $140 million construction loan from TYKO for the 348-unit multifamily building he’s developing in Gowanus with Tavros Capital.
It’s just one of the headline-grabbing deals Chugh’s venture has done in what’s been a very busy year. In short order he’s established TYKO into one of real estate’s most important lenders.
Chugh says he’s done $5 billion worth of loans since launching last August. By way of comparison, Bank OZK — real estate’s biggest construction lender — did $7.2 billion in real estate loans last year.
In the same month TYKO made the Gowanus loan, it also did one of the biggest refinancings in South Florida history when it wrote a $565 million check for the 57-story tower at 830 Brickell Plaza. Developed by Vlad Doronin’s OKO Group and Cain International, it’s the first standalone office tower built in Miami in more than a decade.
And in July, TYKO also refinanced MAG Partners’ 480-unit mixed-income luxury rental project at 243 West 28th Street in West Chelsea to the tune of $196 million.
A month later, the firm provided the mezzanine portion of the $1 billion refinancing for the massive One High Line condo development.
Then in October, it made a $150 million loan to Gary Barnett for his purchase of the office building at 655 Madison Avenue, where Extell Development is planning a residential tower. It capped the month off with a $357 million loan for the Brodsky Organization’s conversion of the Flatiron Building into 40 condos.
As traditional construction lenders continue to pull back, TYKO is quickly making a name for itself.
What’s in a name?
TYKO (pronounced tie-co) stands for “making it happen” and “good luck” in Greek, explained Chugh.
The 43-year-old, a former competitive debater who emigrated from India at the age of 17, started off in investment banking before striking out on his own as an independent CRE debt broker in 2011.
Chugh quickly gained a reputation for being able to craft personalized financing solutions for complex deals.
That’s a valuable talent, because the dirty secret of brokerage is that a lot of people out there aren’t very good at their jobs. It may surprise some people to learn that a lot of brokers do little more than blast out their deals to every lender out there and see who comes back with a term sheet.
The ones that distinguish themselves tend to take a more tailored approach — understanding the specifics of a project and pitching it to a select few lenders who are the best fit. That method has been a hallmark of Chugh’s business, according to people who have worked with him.
“He’s very creative and he has a penchant for explaining value to lenders,” said David Schectman of Meridian Investment Sales. By way of an example, Schechtman said Chugh’s got a knack for helping lenders that specialize in one area — say, rental construction lending — venture out into types of lending they have little or no experience with, such as condo inventory loans.
“This is the time that the top sponsors are going to come into the market because there’s going to be some dislocation or distress, but their go-to lenders are cleaning their own house. So this is white space for us.”
“Adi gets them to do something different,” Schectman said.
As a broker, Chugh had arranged financing for significant projects. In 2017 he brokered a $164 million inventory loan from TPG and Deutsche Bank for Yitzhak Tessler’s condo tower at 172 Madison Avenue. The building at one point had the city’s most-expensive listing: a 5-floor penthouse asking $98 million. (Tessler ran into trouble and put the condo into bankruptcy this year.)
Chugh said the idea to start his own lending platform came a year or two into the pandemic, when he noticed that many of the lenders he would talk to were not as active as they had previously been. But the dealflow from his clients looking for debt was still strong.
“This is the time that the top sponsors are going to come into the market because there’s going to be some dislocation or distress, but their go-to lenders are cleaning their own house,” Chugh said. “So this is white space for us.”
Chugh declined to discuss any specifics related to his joint venture with Elliott Management, but the hedge fund and its billionaire founder are certainly well-known.
Paul Singer, who started his company in 1977 with $1.3 million and grew it to nearly $70 billion in assets, has been called “the Doomsday investor” and “the world’s most feared investor.”
He’s become known for his no-holds-barred style of activism, employing a ruthless PR operation to bludgeon his takeover targets into submission. A New Yorker profile from 2018 laid out the details of a smear campaign Elliott allegedly conducted against the founder of the health-care technology company Athenahealth.
Singer also became the poster boy of what’s known as a “rogue creditor” — someone who buys up the distressed debt of a struggling nation (usually in Latin America or Asia) and then strong-arms them into full repayment.
In the most notorious case, Elliott in the early 2000s bought distressed Argentinian debt for about 20 cents on the dollar and — over the course of about 15 years at a reported annual interest rate of 101 percent — fought the country to eventually earn a 392 percent return worth $2.4 billion.
Singer’s company even tried to take possession of a 338-foot Argentinian naval vessel as collateral. (This last bit might be of particular interest to any real estate developer giving TYKO a personal guarantee.)
“While he’s been scorned for employing bullying tactics at times, Singer doesn’t worry about his tough reputation. He sees it as a selling point for his investors,” wrote reporters at Bloomberg in 2017, calling him “aggressive, tenacious and litigious to a fault.”
“It doesn’t bother me anymore,” Singer said in a Bloomberg TV interview. “It’s good when a corporate executive listens with the understanding that we are real, that we have the capacity to carry through.”
Trade, mark
TYKO hit the scene at a time when some tried-and-true lenders are pulling back.
Bank OZK said in October that it’s capping the size of new construction loans to $500 million as it looks to limit its exposure to large deals.
The Arkansas-based bank is also going to start syndicating large deals with other lenders. That helps spread the risk around, but also presents more complications as it requires the bank to hammer out deals with other investors in order to get a loan done.
TYKO, on the other hand, writes whole loans. And Chugh relies on what he calls a user-friendly approach.
“They were flexible, creative and able to make quick decisions as we negotiated the terms of the loan,” said the Brodsky Organization’s Dean Amro, who added he hopes to do more deals with TYKO in the future.
Chugh said being easy to work with means not sweating the small stuff that can kill a deal due to analysis paralysis.
“It’s like when you’re building a house. Are you worried about the paint under the sink in the kitchen? Or are you worried about the foundation?” he said. “We focus on what is essential.”
Chugh indicated he’s done with brokerage and teased that he’s got some more big financing deals to announce.
He wants to make TYKO a household name in the industry, but there could be at least one complication.
In October the French asset manager Tikehau Capital, which has an office in the Meatpacking District, indicated that it plans to file an opposition to TYKO’s application with the U.S. Patent Office for a trademark to its logo: a trio of polygons forming a “T” over the name TYKO Capital.
It’s strangely reminiscent of another naming battle Chugh incited with his brokerage business, which for roughly ten years had been called Maverick Commercial Real Estate and was often mistaken by people in the business for David Aviram and Ted Martell’s lending business, Maverick Real Estate Partners.
The other Maverick sued Chugh’s company for copyright infringement in 2021, and after settling the case Chugh rebranded his company as Surya Capital Partners.
Whatever the outcome, it seems Chugh and Elliott are going to stick around making their mark.
“There’s a lot of money out there that wants to go into New York construction and development; it’s just become a lot more consolidated these days,” said Charney. “There aren’t as many firms that are lending, so if you have access to a massive amount of capital you can become a pretty big player. And I think that’s what they’ve become.”