COVER STORY
The Deals in the Details P art of Stephen Rosenberg’s vision for Greystone & Co. has always been that the company would lead the way in bringing new investors into the real estate sector along with new concepts, strategies, and solutions. This has created a vast history of creative deals and innovative lending on a grand scale. “Our goal, from the beginning, has been to take a product that seemed intimidating, those HUD loans and other large-scale lending programs, and really make them accessible to the mom-and-pop real estate owners,” explained Judah Rosenberg, Stephen Rosenberg’s son, a vice president at the company, and an experienced real estate analyst entrenched in HUD lending. Greystone & Co. routinely brings underwriters to what Judah refers to as “the front lines” to meet with clients directly and best assess their needs, and the company’s focus on transparency throughout the entire application process has the pleasant side effect of creating some of the fastest closing times in a notoriously slow industry. The company does more than just boast short timelines; a recent pilot program designed to expedite the loan process closed three deals in four months, whereas this type of lending often takes a year or more to close. Below is a small cross-section of the types of deals Greystone & Co. facilitates on a regular basis.
STEPHEN ROSENBERG
“Greening Up” in Raleigh, North Carolina
Growing a Portfolio in Williamsburg, Brooklyn
One of Rosenberg's stated goals is to make Greystone & Co. one of the best places to work in the industry. Here, he confers with Serafino Tobia, Greystone's head of CMBS trading.
This transaction involved a $29.2 million Freddie Mac Green Up loan, a 368-unit
multifamily property in
TODAY’S FIRST ORDER OF business for Stephen Rosenberg, CEO of commercial real estate lending, investment, and advisory firm Greystone & Co., is simple, but it may catch the uninitiated by surprise. It is not, for example, allocating the approximately $30 billion in assets that his company manages, nor is it coordinating a high-profile meeting between the executives who lead his 34-odd company offices and some 8,000 employees. It is not even (although this is a close second on the list) a close review of the due diligence on history- making loans to help create affordable multifamily housing in some of the most astronomically unaffordable markets in the country. This morning, as soon as we're done with our interview, Stephen Rosenberg is off to provide some personal assistance to an employee in need before getting on with his to-do list and his day. “This firm runs on logic, except when it comes to the way we care for people in distress,” Rosenberg said. “When people are not treated fairly, when someone’s ‘rainy day,’ so to speak, is today, then that becomes my priority.” That “someone”
of our profits went to charitable causes, helping others and enhancing lives.” The company has never raised any outside equity, unusual in this sector. “We’re a principal lender with a loan servicing portfolio of about $26 billion and we have never gone outside to raise equity. We always invest whatever profits we make, however meager or substantial, back into the company and into the lives of others,” Rosenberg said. Over time, Rosenberg was able to expand and contextualize Greystone’s philanthropic vision in several sustainable and profitable ways. Perhaps most notable in this regard is the nonprofit Harmony Housing, a 501(c)3 focused exclusively on the acquisition of affordable housing assets nearing the end of their initial tax credit compliance periods, meaning the cost of living in those developments could rise, sometimes astronomically, in the near future and dramatically alter the lives of many residents. For example, in mid-2017, Harmony Housing acquired three multifamily properties in Texas with a total of 862 units. The acquisition was funded largely through the entity’s
can be a client, an employee, or anyone in need. “I was brought up to understand the only things that really belong to us are the deeds we do, good or bad,” he added. “Those seeds were planted early by my parents, and I’ve spent my life living that my purpose is to love and do for others.” Rosenberg’s values have been proving themselves for more than 30 years on an increasingly large scale. Greystone & Co.’s foundation was, literally, two filing cabinets and a spare door: the desk at which Rosenberg sat to make calls to the owners and managers of HUD-insured multifamily properties in default. “We had to call them. Nobody else would call us back!” he recalled ruefully. “I had to develop an expertise that was better than their other options, and that became our specialty: working out defaults of apartment buildings.” Greystone has been in the business of problem-solving ever since. THE GROWTH FACTOR: GIVING From the very first loan workout, Rosenberg’s philosophy was enacted in full force. “Every year, no matter how well (or not) we did, at least 50 percent
Raleigh, and residents and
borrowers committed to energy and water savings. Greystone originated the loan on behalf of one of the largest publicly traded REITs in the country. The terms provide both attractive returns and an attractive philosophical angle for REIT investors, who value the energy savings for environmental reasons as well as how they translate in the bottom line.
On the “smaller” side of Greystone’s lending operations, the company recently provided $13.3 million in Freddie Mac financing for a 24-unit apartment building in Williamsburg, Brooklyn. The loan enabled the sponsor to permanently exit construction financing after building the competitive new rental property. Construction loans are short- term and intended to finance the building phase of a project. They tend to have higher interest rates and are perceived as higher risk. Entering permanent financing enables an investor or investment group to reduce carrying costs once the project is complete.
Affordable Housing Rehab Hangs On in Newark, New Jersey
Greystone & Co. combined efforts with Hudson Housing Capital and Freddie Mac to finance a $160 million effort to upgrade 842 subsidized housing units in Newark, New Jersey. The development serves seniors and residents in deep poverty who may pay as little as $80 a month in rent because their incomes are so low. Financing this type of upgrade project is vitally important to communities with a scarcity
of affordable housing because without financial wherewithal to upgrade the units, the inventory will either eventually be lost to neglect and disrepair or “gentrify” out of existence to make way for higher rents. Making upgrading these types of units both affordable and attractive from a returns standpoint is crucial to serving the housing needs of an increasingly large portion of the population.
Photo courtesy of New Community Corp.
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