Hudson Yards' Oxford Has Big Plans to Finance Other Builders' Projects Across the U.S.

(Bloomberg) -- Oxford Properties Group has big plans to finance other builders from New York City to Los Angeles and profit from demand for real estate capital.

The property arm of Canadian pension fund OMERS got into the financing business in 2011, in the aftermath of the housing bust, when scarce credit offered an opportunity. Since then, it has invested in more than $3 billion in loans, from bridge financing to mezzanine debt, and plans to boost the total to more than $6 billion by 2021, Kevin Egan, Oxford’s head of New York and global credit, said in an interview.

“We see a lot of flow, a lot of volume,” Egan said. “We’re using our equity knowledge and conviction to make good credit investments which have good risk-adjusted returns.” He added that “we focus on markets in which we’re also a landlord, where we really understand the dirt and where if something bad happens, and we had to step in and take ownership, we’re capable.” So far, he said, it hasn’t been necessary.

Oxford’s typical annual return in its lending business is between 8 and 10 percent, Egan said.

Oxford isn’t the only developer offering financing. Silverstein Properties Inc. launched a lending venture this week to profit from what it sees as a financing gap left by banks, with plans to lend money for New York projects first.

Toronto-based Oxford is targeting cities such as New York, Boston, San Francisco, Los Angeles and London but is open to other deals. It lends largely on retail and office projects. The typical loan is from $75 million to $150 million.

Even as it lends more, Oxford is ramping up its own development in New York, spending about $2 billion to transform an old freight terminal at Hudson Square, on Manhattan’s West Side, into a 12-story office building. It’s also working with Related Cos. to develop 28 acres (11.3 hectares) at Hudson Yards, which the companies say is the largest private real estate project in U.S. history.

Among its other properties are Olympic Tower, on Fifth Avenue, and 600 Mass Avenue, in Washington.

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