Meridian Capital Group and Barings are starting the week with a bang. The partnership’s new lending platform, NewPoint Real Estate Capital, launches today, Commercial Observer has learned.
The partnership, first announced in January, is also backed by private equity firm Stone Point Capital. Since the announcement, NewPoint has completed its acquisition of Barings Multifamily Capital and is ready to hit the market, leveraging Meridian’s relationships and Barings’ lending and asset management capabilities.
The new platform is led by David Brickman as CEO and Jeff Lee as president. Brickman was formerly CEO of Freddie Mac, while Lee was previously the head of multifamily and head of underwriting and asset management at Capital One.
In addition to Lee, NewPoint has hired six other multifamily heavy hitters to its senior management team, each with 20+ years of experience within multifamily and agency lending: Phil Spellberg, chief operating officer; Elie Tannous, head of capital markets; Joshua L. Schonfeld, head of affordable programs; Wayne Elibero, senior relationship manager; Bob Douglas, senior relationship manager; and Karu Arulanandam, head of affordable underwriting.
“I think it’s an incredibly exciting time to launch our new platform,” Brickman told CO. “What’s really unique and makes this a once-in-a-lifetime opportunity is the alignment of stars that’s occurred, in terms of this opportunity to start a new venture that’s also not truly new. It’s got this tremendous sponsorship in terms of established institutional partners: Meridian, a huge real estate juggernaut in the industry; Barings, also a significant player; and Stone Point Capital in the background.”
“So, we’ve got this fantastic sponsorship behind us, each with deep roots in real estate, and yet, we have a brand new platform,” he added. “We have the ability to create something that will reflect not just where the industry is today, but where we think it’s going.”
With its leadership’s deep roots in agency lending, NewPoint will provide Fannie Mae, Freddie Mac and U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) loans, as well as customizable financing and more tailored solutions for lending needs outside of the agency lending box. It will focus primarily on multifamily lending opportunities— both market rate and affordable — as well as senior housing, health care properties and manufactured housing. NewPoint also intends to reinvent multifamily securitization.
The platform launch comes on the heels of ever-increasing investor interest in the multifamily sector, which only underscored its accolade as a true, safe haven asset class during the COVID-19 pandemic and saw investors reallocate capital to it, away from asset classes languishing under the weight of the pandemic.
“Multifamily continues to ride a tremendous wave,” Brickman said. “Investors see the need for multifamily housing in the U.S., and that the long-term prospects for rental housing in particular are extremely strong, so we’ll see continued construction and continued strong price appreciation.”
Brickman said that NewPoint is going to be able to distinguish itself from a swelling sea of competition on the lending side by leaning into management’s deep expertise and filling spots in the capital stack — emerging in a post-COVID world — that are too complex for conventional multifamily loan executions.
“Given where pricing is in multifamily, and where conventional lending standards are, it’s hard to meet capital’s need with first mortgage debt as it’s currently done today,” Brickman said. “Preferred equity and mezzanine is part of [the solution], but actually, the bigger opportunity is rethinking part of the equation. So, is there a way to deliver some additional first mortgage capital by utilizing the capital markets? I think that’s going to be the greatest strength of this platform.”
As such, NewPoint will be identifying pockets of capital to partner with and creating a new securitization vehicle to provide higher leverage for institutional multifamily product with strong sponsorship.
“Multifamily has been underrepresented in CMBS for a long time,” Brickman said. “And I think there’s an opportunity to rethink securitization for multifamily. Certainly, that’s what we were able to do over at Freddie Mac, when we developed our securitization program, and I think there’s an opportunity to look at something similar in the non-agency world.”
As for a timeline for a launch of a new securitization vehicle, “we have to crawl before we walk,” Brickman said. “But, our aspiration would certainly be by the end of this year.”
After all, “in a lot of cases, you’re barely able to get 70 percent leverage in multifamily,” Brickman said. “Given the asset class and given its safety, we want to be able to figure out how to get to a little bit higher leverage — that, in turn, would make returns a little more attractive for investors, and from a debt perspective, I think that’s the real opportunity.”
As for the new platform’s name? It heralds a new point of view and a shift from traditional multifamily financing to more efficient and innovative models. But, as Brickman said, this isn’t your typical startup, with the leadership team leveraging decades of experience as they embrace the next iteration of multifamily lending.
“Our sponsorship, our network of connections and relationships, and our experience is really going to let us do some really great and innovative things that are going to be a really big deal in the market,” Brickman said.
Meridian Chairman CEO Ralph Herzka is also chairman of the NewPoint board while president Yoni Goodman is a member of the board. Ben Silver, co-head of U.S. real estate at Barings, is also a board member.
“We are thrilled to be embarking on this new chapter. Our partnership with Barings will enable us to join forces with one of the world’s leading asset managers and reintroduce Meridian to the direct agency lending arena,” Herzka said in a statement. “With David Brickman’s leadership, vision and creativity, our goal is for NewPoint to quickly become a go-to platform for multifamily financing nationwide.”
“The closing of this transaction represents the next step in our roadmap for the growth and evolution of Meridian,” Goodman added. “As NewPoint is now launched, we will turn our attention to increasing its originations and product offerings, and to growing Meridian’s mortgage brokerage and investment sales divisions further on a national scale.”
“Barings is delighted to have an ongoing role with NewPoint and its impressive team led by David and Jeff,” Silver said. “The combination of Meridian’s world-class origination capabilities and Barings’ extensive institutional strengths uniquely positions NewPoint to make a meaningful impact on all facets of multifamily finance.”