Investors Bank recently originated a $15 million loan to refinance a 50,500-square-foot mixed-use property with three retail spaces and 25 offices in Hoboken. — Courtesy: Investors Bank
By Joshua Burd
After riding the state’s multifamily boom to help build its commercial real estate lending platform, Investors Bank remains committed to the apartment sector.
But it’s also making sure to diversify as it continues to expand its lending business.
Investors, a Short Hills-based bank, has moved in recent months to incorporate stabilized commercial and mixed-use buildings into its lending portfolio. For instance, the company in February announced deals such as a $14.8 million refinance of an 111,000-square-foot office building in Branchburg and a $13 million loan for nine retail properties in northern New Jersey.
All told, Investors’ commercial loan portfolio as of March 31 had grown to $4.6 billion, up from just under $3.9 billion at the same point in 2016. In the first quarter of 2017, the bank originated $234.7 million in commercial real estate loans, compared with $178 million during the same period last year.
“I think we’re consistent with other folks that diversity is good,” said Joseph Orefice, the bank’s head of CRE lending. “It doesn’t mean that we’re turning that spigot off. We’re just trying to turn the other spigots on a little more.”
To be sure, the apartment sector has helped fuel the rise of its lending platform in recent years and continues to grow. Investors’ multifamily loan portfolio was nearly $7.8 billion as of March 31, up from $6.5 billion a year earlier.
But Orefice, who joined Investors eight years ago, said a combination of market forces and the pursuit of smart planning has caused it to expand into traditional commercial assets.
He also conceded that there is more risk when lending outside the apartment sector. When it comes to multifamily, “it’s relatively easy to understand, you know your markets and there’s a lot of it to do, so in terms of being able to do that business in volume, it’s a little easier.”
It’s also “a little more homogeneous in terms of product type,” as opposed to the additional nuances that come with understanding asset classes such as retail.
“When you get into retail, it’s a little more specialized, so it requires a different discipline to know a good deal from a bad deal,” Orefice said. “Leases are very site-specific, tenant-specific and things like that. So it takes a little more subjective knowledge, I think, to do those well.”
Either way, Investors is continuing to grow on the commercial real estate side. In December, the bank announced a bevy of loan activity that included $42 million for the acquisition of a nearly 265,000-square-foot office building in Secaucus and $27 million to refinance a 759,200-square-foot warehouse in North Brunswick.
Playing in the industrial sector is perhaps the most appealing of any other on the commercial side, given the robust market for warehouse and distribution space in New Jersey. But the bank will also continue to look for select office and retail deals.
“Both of those categories certainly have seen their issues,” Orefice said. “With office, it’s location by location. I think it’s been a dark story in New Jersey for a long time, with suburban office especially. But I think that there are also pretty good stories in certain areas of New Jersey over the last few years, so we’re trying to use the old real estate adage of ‘location, location, location’ and make judgments based on that.”
