When Headwinds Threaten In 2024, Borrowers Can Turn To Lenders Who Have Braved The Storms Before

In 2009, while the rest of the U.S. was busy recovering from the Global Financial Crisis, childhood friends Mark Bahiri and Mark Penna saw an opportunity to build a lending firm that could learn from the mistakes of the past. 

“When almost every lender was reassessing their loan book and adjusting their underwriting models to reflect the conditions of the GFC, we were able to learn from the loose lending standards of banks and commercial mortgage-backed securities lenders,” Bahiri said. 

The two formed Emerald Creek Capital to provide short-term loans to commercial real estate firms across the country. Today, 15 years later, Emerald Creek has provided more than 500 loans across 29 states, exceeding $2.9B in capital deployed. Bahiri and Penna serve as the firm's managing partners and co-founders, and despite the challenges of the current real estate market, they have plans to expand. 

Regardless of how the market has shifted in the last decade-and-a-half, Emerald’s mantra of “preservation of capital first” has never changed, Bahiri said. This has enabled the firm to maintain a well-positioned loan book even while CRE has experienced some headwinds. 

Emerald Creek has avoided the areas of real estate that have recently experienced the most problems. Specifically, the firm has zero percent exposure to office buildings and less than 10% exposure to retail assets.

“Staying disciplined has allowed us to continue writing new loans throughout this market cycle and we expect even more growth in the coming years,” Bahiri said. “Emerald Creek has developed a strong following of repeat borrowers in the multifamily and industrial sectors.”

While banks, historically the main CRE lenders, are pulling back from the sector across almost all asset classes, Emerald Creek has no plans to shy away from lending during this time of widespread market volatility. On the contrary, this is exactly the type of challenging environment where the firm truly shines, Penna said. 

“Emerald Creek has historically adapted and ultimately thrived during times of economic uncertainty,” he said. “We are always focused on providing a premium level of service and flexibility to our borrowers, while managing portfolios and maximizing investor returns.” 

Short-term financing, in particular, is predicted to play a large role in the CRE financing landscape in the next few years. While short-term rates hit their highest level in 22 years during 2023, reaching between 5.25% and 5.5%, rates are predicted to drop to 4.6% in 2024 and reach 2.9% by the end of 2026.

Penna said that since its inception, Emerald Creek has worked hard to earn the trust the CRE industry has instilled in it as a capital partner. The firm plans to continue nurturing those relationships during this time when bank-alternative lenders, like Emerald Creek, are needed more than ever. 

“Nontraditional lenders are poised to lead the CRE industry in both the short and long term,” Penna said. “They offer an ease of efficiency and agility that larger institutions don’t allow for. Experienced firms such as Emerald Creek bring an even deeper level of understanding to risk mitigation. We are adept at building resilient strategies that withstand an unpredictable market.” 

As the industry moves further into 2024, borrowers should remain resilient and opportunistic, Penna said. The key is to remember that while change creates challenges, it also creates an entirely new set of circumstances that those who are prepared can capitalize on, he said.

“We also want to remind our clients that Emerald Creek is here not only as a reliable source of financing but of insight as well,” Penna said. “We are a trusted strategic partner, which we've learned ourselves is an invaluable asset during times of change.” 

This article was produced in collaboration between Emerald Creek Capital and Studio B. Bisnow news staff was not involved in the production of this content.

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