Non-Bank Lenders on the Rise

Private equity giant Blackstone was one of the top 10 commercial real estate lender in New York City in 2016, as CrediFi reported in its Q4 Lending Spotlight.

A similar trend is taking place year over year, with Blackstone’s commercial real estate origination in New York City rising to over $1.5 billion in 2016, a significant increase over its NYC lending portfolio the previous year. That leap is reflected in Blackstone’s placement in the CrediFi Annual Ranking.  In 2015 Blackstone did not break the top 100; in 2016 it came in at No. 8. (The sample used for the ranking has limited commercial condo and construction data.)

Top 10 non-bank lenders made up 13% of NYC lending in the 4th quarter of 2016.

Other non-bank lenders are also on the rise. The top 50 lenders of 2016 include non-bank lenders Aareal Capital Corp., Acore Capital Mortgage and Starwood Capital Group, all of which saw their lending rise in 2016. The increase was steepest for Starwood, whose lending grew more than tenfold, and Acore, one of the top 5 non-bank lenders in Q3, whose lending quadrupled in 2016. However, Ladder Capital, another top 5 non-bank lender in Q3, saw its lending drop 25% year over year.

Compared with 2015, non-bank lenders also allocated a higher proportion of their commercial real estate financing in 2016 to construction and renovation projects. Construction loans tend to be riskier than other commercial real estate loans but offer a higher yield.

Alternative lenders’ increasing interest in the commercial real estate market appears to indicate they are taking over some lending from traditional banks and picking up some of the slack from the slowdown in CMBS lending. Players in the securities market may be taking a step back to assess the impact of the risk-retention requirement, which requires sponsors of commercial mortgage-backed securities to hold on to 5% of every new deal or assign the risk to a B-piece buyer.

To download the entire Lending Spotlight, click here.

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Alex Veksler

Head of Content

Alex Veksler has 16 years of finance, data analysis and project management experience. He is a former vice president at Morgan Stanley, where he worked on product control of equity and fixed-income derivatives products as well as various projects involving finance and technology, such as revamping risk attribution and balance-sheet systems for profits and losses. Alex has previously worked at hedge funds, most recently as a director at Exigent Capital. He has a bachelor’s in computer science from Yeshiva University and an MBA from New York University.

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