Silverpeak Real Estate Partners, the private equity real estate spinout of now-defunct Lehman Brothers, is the latest firm to enter the real estate financing business with the launch of Silverpeak Real Estate Finance. Silverpeak and Elliott Management, the management affiliate of hedge fund Elliott Associates, each are committing capital to back the new business. Terms of the deal were not disclosed.
Silverpeak Real Estate Finance, which officially will launch toward the end of the first quarter, will originate loans throughout the US, with a focus on office, hotel, retail, industrial and multifamily properties. The platform will provide fixed-rate and floating-rate commercial mortgages, typically $5 million or greater in size, but a first-year target for loan origination volume has not yet been determined.
Silverpeak has established the new platform at a time when sales of commercial mortgage-backed securities (CMBS) have been on the upswing. Industry expectations are for the CMBS market to grow to approximately $100 billion in new issuances in 2014, up from approximately $80 billion this year. The firm intends to securitize the loans originated through Silverpeak Real Estate Finance.
The timing of the launch also has to do with the anticipation of strong refinancing activity next year amid concerns over interest rates potentially rising, according to a company spokesman. Additionally, new credit risk retention rules will make it more difficult for traditional lenders to hold commercial mortgages, which will open up an opportunity for nonbank institutions to provide capital to borrowers, the spokesman explained.
Silverpeak Real Estate Finance will be led by Douglas Tiesi as chief executive officer and Peter Tzelios as chief operating officer. Tiesi most recently served as managing director and head of the US commercial real estate business at Royal Bank of Scotland, while Tzelios was a principal of Full Stack, a commercial real estate lending and investment firm. The finance arm also will comprise additional staff in New York, Atlanta, Chicago, Los Angeles and Dallas. Meanwhile, Mark Walsh, a co-founder of Silverpeak and formerly the head of Lehman’s global real estate business, will serve as chairman.
Silverpeak, led by Walsh and Brett Bossung, the former global co-head of Lehman’s private equity real estate group, spun out of the troubled investment bank in 2010. The firm currently manages more than $12 billion in real estate assets on behalf of clients through commingled funds and separate accounts.