By:  Hellen Zaboulani

While most major banks have become fearful of giving out commercial loans, one bank is jumping in.

As reported by the NY Post, many banks have become reluctant to dole out commercial loans in today’s market, due to the predicted crash of office real estate in the city.  Manhattan office space prices are expected to plummet as much as 40 percent off their peaks, making it a worse crash than the 2008 financial crisis, as per a forecast by Morgan Stanley Wealth Management.  The increase in interest rates is also not helping matters.  In early May, First Republic Bank, with all 84 branches as well as $92 billion in deposits and $203 billion in loans, were sold in a fire sale to JP Morgan Chase. This has also acted as an alarm, keeping major banks weary of adding more commercial loans to their portfolios.

Despite all this, one bank is stepping up, with a never-back-down attitude, and determination to forge ahead.  Northwind Group, a Manhattan-based real estate private equity firm founded in 2008 is taking on the turbulent Manhattan-market with a fearless air.  It helps that the founder, Ran Eliasaf, has experience with shaky waters, having formerly captained an Israeli warship earning him a commander’s confidence.  Eliasaf’s motto is,  “Survive ’til twenty-five”, referencing the 1990’s motto, “Stay alive ‘til ninety-five”, used in a similar market downturn when an excess of new office space flooded Midtown and numerous developers had to forfeit new shining but empty towers to their banks.

As per the Post, Northwind recently bravely doled out a $313 million construction loan to Fortress Investment Group for work at 125 Greenwich St.– the 80-story residential skyscraper where construction has been stalled since early 2019.  “They saved it by stepping in,” Eliasaf said, referring to Fortress in the project. “Once they had the right capital structure, we thought it was a great investment for us.”  Eliasaf went on to add that his firm is positioned to also play a bigger role now in commercial-debt financing.  “We’re now in the front row of providing loans to major projects,” Eliasaf said. “Our role is providing the capital that you simply can’t get from banks. Most Northwind loans are for mixed-use combinations of residential and retail.”

Unlike Vornado chief Steven Roth, who gave an overly optimistic forecast last week, saying commercial real estate is looking like it’s on its way up with remote work options coming to an end, Eliasaf is not overly confident.  He concedes that Manhattan will face a slow but steady recovery, but feels like the city is not doomed rather resilient.  He predicts the work-from-home fade will continue to wane over the next two years.  “Nobody wants to touch office right now. But I believe it will be back,” Eliasaf said.

Northwind entered the niche of the lending-only business in 2017. The firm’s portfolio boasts some $3 billion in assets-under-management of equity and debt investments in residential, commercial, senior living and healthcare properties.  Another of the firm’s recent high-profile loans include $162 million to convert 685 Fifth Avenue into the Mandarin Oriental luxury residences, the Post reported.