NEW YORK CITY—CapStack Partners LLC on Tuesday announced the launch of its new agency loan origination platform, extending its capabilities to providing developers and property owners with financing through Fannie Mae, Freddie Mac and the Federal Housing Authority. CEO David Blatt calls the creation of an agency platform “a logical next step as it rounds out our service offering, particularly for our multifamily and seniors housing clients.” GlobeSt.com spoke with Blatt as the new platform was being unveiled, putting it into the context of the specialty investment bank's evolution since its formation in 2012 and where it's going.

GlobeSt.com: How does the introduction of agency lending extend the CapStack platform, and what are the requirements of CapStack clients that would make the introduction of agency lending capabilities especially valuable for them??

David Blatt: We provide debt and equity solutions for our clients, and in most cases we're dealing with groups who are either doing construction-related projects or traditional value-add execution. The bulk of this happens to be in the multifamily space. We tend to get involved with our sponsors very early in the process, even before they've tied up a deal, simply because they want to know that there's going to be a successful execution when it comes to capitalize the deal, regardless of tranche. As you go through the life cycle of a project, these groups will need some kind of permanent financing at some point, essentially to exit from whatever the traditional debt structure was intended to do.

Historically, we've always gone out and sourced that financing in an advisory capacity. But it just made a lot of sense to become more fully integrated with the exit solution that a lot of our clients are ultimately seeking at the back end of these shorter-term projects. So we're now not just going out and seeking the financing exit on the back end of that project; we're able to deliver that directly that to them

GlobeSt.com: Non-bank lenders have been taking a more prominent role in the commercial real estate finance arena. What are some of the advantages that a non-bank lender can offer?

Blatt: You have a lender profile that has an understanding of a project's business plan. Whether they do or don't, regulated banks are very boxed in terms of the credit side of the equation. Most of the non-bank lenders are going to be participating in that transitional asset or even a construction type of project. They're going to be looking at the scope of the project where the end result is a part of that project. They're not as restricted by regulations when it comes to certain metrics; they're just looking at whether the sponsor has the track record to get there and what the ultimate value is when they do.

What that implies for the sponsor is two things. One, being able to have a conversation with a lender who “gets it” and speaks their language. Two, you're also now dealing with a level of certainty of execution, because while a bank can offer a more competitive rate compared to a non-bank lender, the sponsors need to know they're going to have someone at the table at closing. These non-bank lenders offer that. Those two things represent a very powerful value proposition for these developer sponsors. You're also seeing a lot more groups entering into the space, which is beneficial to the sponsors. The loan size is pushing down into much smaller balances and you're able to compete with your more traditional hard money lenders, both in the sophistication of the debt player and the cost of capital becoming much more competitive, despite it being at a premium to the regulated banks.

GlobeSt.com: What are some of the areas in which you'll be looking to further expand the CapStack platform, and what will be some of the main drivers of that expansion?

Blatt: We're always looking at ways in which we can more effectively and efficiently execute on behalf of the sponsor relationships that we've developed. Ultimately, our entire platform is based on capital markets and access to capital, and where we had gone out and accessed third-party, we're now directly originating in the form of agency. So where we can identify gaps that we can tighten up and be more efficient for our clients, that's really where we're going to be looking to develop the platform—really blurring the lines between accessing capital and providing capital.

GlobeSt.com: Non-bank lenders have been taking a more prominent role in the commercial real estate finance arena. What are some of the advantages that a non-bank lender can offer?

GlobeSt.com: What are some of the areas in which you'll be looking to further expand the CapStack platform, and what will be some of the main drivers of that expansion?

Instant Insights /

CapStack Branches Out Into Agency Platform

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