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Northwind Group announced Jan. 30 it provided a $22 million first-position mortgage loan secured by an adaptive reuse project in Newark.

Previously a five-story office property, 303 Washington St. is transforming to a 10-story, 92-unit multifamily building. Upon completion, it will offer studio, one- and two-bedroom units, modern luxury amenities and a 360-degree rooftop deck, Northwind Group said.

The funds will go toward completing construction and leasing the property, according to the announcement. The developer is a joint venture between Albert Nigri of Summit Assets and Avi Benamu and Jack Hazan of Winchester Equities.

Northwind Group said it provided the loan through its closed-end debt fund with competitive terms.

The news comes on the heels of the Manhattan-based company’s best year ever, according to founder and managing partner, Ran Eliasaf. “2024 started at a pace that is going to outdo 2023,” he told NJBIZ.

In January alone, Eliasaf said Northwind Group has doubled where it was during the first month of 2023. He added that the real estate private equity firm did about $1 billion in loans last year.

Founded in 2008, New York-based Northwind is focused on credit strategy. It mostly lends on residential properties in the New York City metro area and other major gateway cities, typically offering bridge, acquisition, construction and condo inventory loans.

Filling a void

Lately, Eliasaf said, Northwind Group has been doing a lot of multifamily loans. When commercial banks stepped back from lending, it provided opportunity for private lenders.

“If you think about it, in a typical year, normal year, about 70% of the financing gets done by banks, and only 30% or so is done by private lenders. In 2023, banks took less than 50%,” he said. “So really the market became bigger to private lenders like us, and the ability to lend to higher quality sponsors and properties really improved.”

That relationship has been beneficial on the borrower side, too.

“Northwind’s financing was a critical step for the completion of 303 Washington as they were able to provide a loan with flexible terms and close in a short period of time,” Nigri said in a statement. “The process was handled with the utmost professionalism, and we were impressed by the diligence and swiftness of their team as we hope to continue working with them in the future.”

On the ground

In Newark, the financing for the transaction was arranged by Zach Mordechai and Ben Frances of MSCO Capital Advisors LLC. Northwind Group was represented by John Vavas of Polsinelli Law Firm.

Looking ahead, Eliasaf expects the pace to keep up for at least the first half of the year. In part, due to the banks’ hesitance, but also due to demand for multifamily housing.

As traditional commercial lenders wait to see what happens with interest rates in 2024, “in the meantime, there’s a lot of good projects that need financing.”

“We try to look two years into the future and see how new supply looks like because our bridge loans are typically up to two years,” Eliasaf explained. “So in the next two years, it feels like the supply side is quite limited, while the demand seems to be back in a big way and the city is growing again.

“And that’s why you’re seeing areas like … Newark, downtown, which have always been secondary, right? They’ve been doing so much better because of that growth and because of the lack of supply,” Eliasaf said.

And when the shift does come, he said that’s OK, too.

“But I think eventually the banks will come back, which will lower the cost of financing, which I think is a good thing,” Eliasaf said. “It’s a healthy thing.”