Count Dalan Management’s Wrublins as the latest landlords to get in the lending game.
Daniel and Andrew Wrublin, whose 43-building portfolio in the city spans some 1,200 apartments and more than 100 commercial and retail units, recently launched a financing platform called SKW Funding.
“We had some experience buying [non-performing] bank loans back in 2008, 2009 and 2010,” Daniel told The Real Deal. “We see an opportunity for bridge lending on equity side.”
So far, the company’s issued about $50 million in preferred equity and mezzanine debt, with the goal of doubling that number in the next year.
SKW’s most recent deal took the form of a $12 million in preferred equity and mezz debt in Simon Baron Development’s purchase of a $24 million development site in Greenpoint. The developer is watching the market closely while considering either retail or office options.
Wrublin said one of SKW’s strengths is the ability to act quickly.
“We went from ‘hello’ to closing in probably two to three weeks,” he said. “That’s part of the value we can bring.”
While Dalan certainly isn’t done buying — the firm in December closed on the purchase of a $44-million Garment District office building on West 38th Street — Wrublin said that at this point in the cycle he sees more opportunities to think outside the box and put out higher interest money in a more aggressive manner.
“If you’re sitting on cash earning 1 percent in the bank, you can make a higher-adjusted return lending,” he said. “It feels like pretty good risk-adjusted investment in this environment.”
Others feel the same way. A number of developers and owners have recently launched mezzanine/preferred equity financing vehicles, filling a niche in the market that grew following the financial crisis as banks tightened lending restrictions, all while taking a safer position as the market gets frothier.
Hartz Mountain Industries scion Manny Stern, Atco Properties and Schwartz Properties have all launched lending platforms recently.
Meanwhile, sings are starting to appear that the kinds of bad loans Wrublin first started buying up are returning. The Durst Organization this week moved to send Ian Bruce Eichner’s East Harlem rental project into foreclosure. Durst recently bought the non-performing debt from Eichner’s lender, Garrison Investment Group.