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