News Column

Commercial lender opens West Coast operation in Irvine

June 11, 2014

By Jonathan Lansner, The Orange County Register



June 11--The Great Recession exposed numerous flaws in landlord logic.

Owners of properties that housed both households and businesses suffered painful losses that pushed the industry's financial backers -- investors and lenders -- to the sidelines.

From a near freeze mid-recession in 2008-09, investment real estate initially slowly rebounded. But over the past year or two, as the overall business climate nudged forward, a novel concept has emerged in the world of big property ownership -- lenders actually lending.

One further sign: A growing Midwest and East Coast commercial lender -- Bellwether Enterprise of Cleveland -- has decided go nationwide, opening a West Coast operation to be headquartered in Irvine.

"The West Coast is a very large market and we think we can expand there. Conditions are fantastic," says Ned Huffman, Bellwether's president.

Bellwether is in growth mode, on target to hit $2.3 billion in lending this year after making $1.8 billion worth of deals in 2013. Its new West Coast operation will be headed by a veteran real estate pro, Trent Brooks. He most recently was chief operating officer at apartment owner Lyon Communities in Newport Beach.

In as soon as two years, Huffman says Bellwether hopes to be lending $4 billion annually, thanks to expansion in product lines and new efforts on the West Coast and from Boston.

"The Midwest has always been good to us. Not too many ups, and not too many downs. But you don't see the growth you see on the coasts," Huffman says.

Bellwether's key business is a niche that has been investment real estate's darling during the recovery: lending for multi-family housing. That is roughly half of Bellwether's loan activity. Lending on retail property is the other major chunk.

Huffman says apartment owners are in a good spot as the typical house shopper struggles with ownership affordability and more households see rental living as a viable lifelong option.

"Multi-family is the favored property today," Huffman says of investor's appetites. "I don't see anything on the horizon that will change that. We think the rental market is here to stay for a long time."

Bellwether has an unusual tie to the apartment business. It's owned by Enterprise Partners, a not-for-profit endeavor that promotes, builds and owns low-income housing. The group -- founded by master-planned community pioneer James Rouse -- gets much of Bellwether's profits.

That charitable hook was a reason Brooks decided to join Bellwether. "I wanted to do something that made a difference," he says.

Bellwether will start its West Coast push with a seven-to-10-person operation in Irvine. Offices in Seattle, Denver, San Francisco and Portland are in the planning stages. Brooks thinks an annual lending goal of $1 billion in the short run is reasonable for his group.

Brooks says Bellwether's Midwestern values will find an audience in the often wild and competitive West Coast lending arena. Brooks, a Midwest native himself, admits Bellwether won't offer the lowest rates or the most aggressive terms -- but that customers will consider the company's service an important ingredient in its financing relationships.

Says Brooks: "We think the timing is terrific to do rational lending to rational owners."

Contact the writer: 949-777-6727 or jlansner@ocregister.com

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(c)2014 The Orange County Register (Santa Ana, Calif.)

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Source: Orange County Register (CA)


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