New York City real estate lending professional David Schwartz has launched Fort Amsterdam Capital, a bridge lending debt platform that will provide short-term loans on multifamily, mixed-use and small office properties in New York City.
The bridge loans on “high risk” assets will have a typical duration between 6-18 months, giving borrowers time to achieve the level of cash flow they need to attract longer-term financing and complete their strategy.
“The deals we’ve already done are on buildings that have significant vacancies or where the borrower has ambitions to reposition the property but not enough cash flow to refinance,” Schwartz told Real Estate Capital.
“What makes these deals attractive is that they have a high risk profile,” he added. “These deals carry ambitious renovation plans, and our underwriting of such risk is a huge attraction. The value we provide to borrowers is the quick turn-around, and since we also understand the asset class very well, our value-add to investors is that we protect their interests, even if things don’t go well.”
The platform’s typical bridge loans run between $2-$10 million, targeting 11-13 percent returns, net of fees. Schwartz plans to originate $75-$125 million in deal volume by the end of 2016, with high net worth individuals and family offices contributing the funds.
Schwartz said the commercial real estate market could be nearing a peak, but the current market holds opportunity for the platform to find its niche, noting that “there is a huge opportunity on both the debt and equity side” for both acquisition and refinancing of properties on the higher risk properties he is targeting.
“We’ve seen a noticeable drop in transaction volume in the multifamily sector in New York City,” he said. “But whether that means we are in the eighth, ninth or 10th inning of the game, I’m not sure, because the cycles can be misleading.”
Schwartz is a co-founder of the New York-based real estate investment firm Sugar Hill Capital Partners, where he will continue to be the company’s CFO.