Big change in NYC construction lenders from 5 years ago: ranking

By Adam Pincus

A preliminary ranking of construction lenders who financed New York City ground-up development projects over the past 12 months shows a large change in the most active lenders, compared with a similar analysis made five years ago.

Eight of the firms on the new analysis were not in the list from five years ago, which The Real Deal compiled covering October 2016 to September 2017. The PincusCo analysis covers a similar 12-month period but five years later, from September 2021 to August 2022.

The top five lenders by dollar volume over the past 12 months were Wells Fargo, JPMorgan Chase, Bank OZK, Valley National Bank and Madison Realty Capital.

The top five lenders by the number of loans were NorthEast Community Bank, Valley National Bank, S3 Capital, Popular Bank and Wells Fargo.

PincusCo reviewed 337 construction loans of $5 million and up totaling $18.17 billion provided by 93 lenders over the 12-month period, given to finance projects in New York City. The data only included recorded construction loans, not mezzanine debt. The debt figure is the total for the building loan, project loan and a land or leasehold loan, if recorded the same day. For our ranking, we excluded city and state originators and loans with UMB Bank as the trustee. We also combined banks that combined during the past 12 months, for example the Bank Leumi and Valley National Bank totals are combined, even though they did not complete the acquisition until April 1, 2022, according to a press release.

These figures were not vetted with the individual lenders or borrowers. PincusCo will report on a formal ranking through the end of the third quarter in early November.

While three of the lenders who were in the top five are still in our ranking — Wells Fargo, Bank OZK and Madison Realty Capital — eight of the lenders in the top 15 ranking five years ago are not among the top construction lenders in the new ranking.

Gone are Children’s Investment Fund, HSBC, Bank of China, LoanCore Capital and others. Children’s Investment Fund was extremely active in New York since it provided it’s first loan here in 2011 to Harry Macklowe  and it went on to provide financing for other Macklowe projects as well as Silverstein Properties, Related Companies, Zeckendorf Development, and others while it remains active through 2018. But it has not provided a new construction loan in New York City since at least the second half of 2019, according to PincusCo data.

HSBC Bank was a very active construction lender in 2019, but less so in each year thereafter in construction as well as income producing financing. PincusCo has tracked only two commercial loans in 2022 of any kind for HSBC, totaling just $13 million. Bank of China has also pulled back from construction lending, with it’s last NYC deals in 2020. But it is still investing in new construction, by financing two of Chris Xu’s United Construction & Development Group land acquisition loans this year.

One of the firms that was in The Real Deal ranking five years ago, but not in the new PincusCo raking is the Blackstone Group, which has provided construction loans over the past several years, including a $911 million refinance of debt at L&L Holdings 425 Park Avenue in late 2021. However that loan was mostly a refinance of the original 425 Park loan and so was not included. In addition, Blackstone Mortgage Trust provided a $400 million construction loan to Brookfield Properties in July 2021, but that was outside the time frame of this analysis.

A lender appearing this year which did not appear five years prior was JPMorgan Chase. The giant global bank did not make the 2016-2017 list, but over the past 12 months was the second most active construction lender in New York City by dollar volume, with seven loans totaling $1.8 billion. Half of that was one large $910 million bet, on Witkoff and Access Industries relaunch of construction at the former HFZ Capital Group site, at 76 11th Avenue in Chelsea.

Some of the city’s most active commercial banks, such as Signature Bank and New York Community Bank, do almost no construction lending. PincusCo tracked only one new construction loan for Signature, and none for New York Community, contrasting with the $3.7 billion in loans and refinanced Signature has done so far this year and the $2.6 billion New York Community Bank has provided.

Investors Bank was an active lender on small projects in 2020 and 2021, but had no loans in 2022. In 2022 Citizens Bank acquired Investors. Citizens only gave one loan in 2022 and none in 2020 and 2021.

Another active lender in 2020 and 2021, Sterling National Bank, provided no loans in 2022. Webster Bank acquired Sterling in February 2022.