Tomorrow, Ran Eliasaf will be surfing the less-traveled waters off of Western Sahara in North Africa.
The ocean is Eliasaf’s escape from his day job running Northwind Group, a firm that’s emerged as the go-to lender for complicated New York City real estate deals. Today he is in New York City, in his Midtown office on a dreary winter afternoon.
“When you’re surfing, you connect to this energy, whether it’s wave or it’s wind, it’s an energy coming from hundreds of miles away and you are harnessing it,” Eliasaf said.
An external force is also pushing Northwind: economics. Banks had historically made up 40 percent of real estate lending in the U.S., but they have stepped back since the pandemic. Other debt financing options, namely commercial mortgage-backed securities loans, are limited because of high interest rates.
Private lenders like Northwind are dropping in. These lenders have a different mission than banks; they don’t take customer deposits, and their loyalty is to their investors, often pension funds.
Northwind carved out its niche lending to condo developers saddled with unsold units and office owners seeking to reinvent aging offices into luxury residences. The firm joined the vanguard in 2023, providing a $313 million loan to restart the stalled super-tall at 125 Greenwich Street. Northwind signed a $135 million check to convert the former Pfizer headquarters to 1,600 residential units.
Eliasaf calls this period the “golden age” for firms like his. Northwind is writing more loans at lower leverage points to higher-quality developers than ever. Investors are eager to deploy capital into the sector: Northwind launched its first real estate debt fund in 2020 and is already on to its third (there are also two healthcare funds).
“My sense is there are a lot of players willing to do much larger deals, and there’s a lot looking to do smaller ones,” Brian Steinwurtzel, co-CEO of GFP Real Estate, said. “I think he found a niche in between that allows him to operate really well.”
“There are a lot of players willing to do much larger deals, and there’s a lot looking to do smaller ones. He found a niche in between.”
Developers don’t have great alternatives, especially if they are borrowing in the $80 million to $150 million range for special situations like conversions. There are debt funds focused on gargantuan construction loans, such as Tyko Capital or Madison Realty Capital. You might pay more for money from Ran compared to a bank, but at least you’ll get the funding you need.
“Northwind had a ton of dry capital and was finding deals that would have gone to traditional lenders,” John Vavas, a real estate attorney at Polsinelli who has represented Northwind in deals, said.
But all waves eventually crash. Banks will come back. CMBS deals are starting to pick up again, with new issuance in 2024 at levels 2.5 times higher than in 2023, according to Kroll Bond Rating Agency.
Many developers, in perpetual search for cheaper capital, will inevitably ditch the private lenders for banks offering lower rates.
Yet, Eliasaf, who is quick to crack a smile, seems unfazed. The former captain in the Israeli Navy preaches discipline and perspective to his team. Just stay on course and success will come.
“There’s no life-or-death situation here,” Eliasaf said. “It’s just a deal.”
Northwind and his peers’ biggest selling point is speed and flexibility. Northwind claims it can close on a loan in three weeks. A bank would require 45 days. Private lenders are often considered more aggressive, but Northwind has yet to initiate a foreclosure and has had only three distressed loans.
“We prefer to take the longer route,” said Eliasaf.
Surf school to law school
Eliasaf was raised in Israel as a self-described army brat. His father was a fighter pilot in Israel’s Air Force and Eliasaf spent his childhood moving from base to base.
“I don’t think I knew in high school what I wanted to do,” Eliasaf said. “I think I mainly wanted to surf.”
He entered Israel’s Naval Academy, spending six years in the military, three more than the mandatory conscription, and rising to the rank of captain. Afterward, he spent a year in the Dominican Republic, where he opened a surf school and tended bar on the side. He was set to attend law school in Israel but had doubts.
“I really followed what my core was telling me. My core was telling me I shouldn’t be an attorney,” Eliasaf said. “My core told me I should be in real estate.”
Still, he enrolled. In law school, Eliasaf caught his break. He landed an internship with an attorney who acted as an advisor for wealthy families hoping to invest in Israeli real estate. Eliasaf started as a personal secretary before becoming the attorney’s trusted aide. That connection spawned another. And in 2007, Eliasaf found himself working at a real estate fund out of a private office, flying back and forth between the U.S. and Israel.
The financial crisis in 2008 was their opportunity. Eliasaf bought the distressed debt on a grocery-store anchored shopping center in Florida — his first deal.
“The biggest lesson I learned is that when there is true distress, prices don’t matter, [banks] just need to get [it] off their books,” said Eliasaf.
He sold his stake in the business in 2011 and started doing his own deals at Northwind, a holding company named for the best direction for kite and windsurfing in Israel. Eliasaf spent the next six years looking at equity deals, or buying and selling real estate, completing $2 billion in transactions. Most notable was 100 Pearl Street, a 27-story office building in the Financial District.
But Eliasaf saw the tides shifting. While he was making solid 16-to-18-percent internal rates of return in 2014 and 2015, he decided prices were getting out of hand and dealing on the equity side was getting too risky.
The way he saw it, the credit space, or lending to real estate, was a safer, more consistent way to make money.
“I think I didn’t understand risk well enough early in my career, and every deal looked amazing. I didn’t realize all the shit that could happen,” he said. “The more I do real estate the more risk averse I’ve become.”
The nice guy
During the pandemic, banks had to focus on their existing loan books. Meanwhile, Northwind made one high-profile deal after another. In 2022, Northwind lent $162 million in construction financing to Michael Shvo for his swanky Mandarin Oriental Residences at 685 Fifth Avenue.
“My gut was that if there were issues along the way they would be reasonable to deal with,” Shvo said.
The developer picked Northwind again as its lender when it went to secure a condo inventory loan on the property in 2024.
Shvo called Northwind the “most accommodative lender he’s ever dealt with by far.”
“Their lawyers, the people around them, are all doers and people who want to get deals done,” Shvo said.
This image of the nice lender departs from the common narrative about private lenders, debt funds and other non-bank lenders. Companies in this space have gained outsize reputations as vampires ready to bleed developers at the slightest misstep, or ghouls collecting fees and default interest until they seize properties from hard-working developers.
“I’ve never felt being aggressive or raising your voice on a call does anything good,” Eliasaf said. “Being aggressive in lending is a recipe for disaster because you’re only as good as your one bad loan.”
Eliasaf is friendly to developers because he was once in their shoes.
GFP Real Estate’s head of new investments met Eliasaf on an industry ski trip, Steinwurtzel said. At the time, Eliasaf was working on a deal to buy 40 Exchange Place, a 300,000-square-foot 19th-century office building in the Financial District.
After GFP partnered with Northwind on the $115 million purchase of 40 Exchange St. in 2014, the two teamed up again in 2019 to buy the nearby office building at 7 Hanover Square, a 27-story office building now known as 100 Pearl Street, for $310 million. (They renovated the building, signed NYC Health + Hospitals to a 500,000-square-foot lease and sold the property in 2021 for $850 million.)
The challenge at 7 Hanover was that GFP was going to sign a contract to buy the building but not close for two years. The right partner would put up the capital but then be patient while Steinwurtzel searched for a tenant.
Eliasaf, with his ability to assess risk, understand assets and run a quick and nimble team, was the one, Steinwurtzel said.
Word spread.
Changing tides
Nathan Berman heard about Eliasaf from GFP and from David Werner, who had also borrowed from Northwind, he said.
In January, Northwind provided Werner and Berman with a $135 million acquisition loan for the former Pfizer headquarters in Midtown, which the developers are converting into about 1,600 apartments.
Berman said they’re working with Northwind to finance another conversion project.
“Now we’re doing a second deal with them,” he said.
Eliasaf is indeed in the boomtime. Only 44, and not that far from his D.R. bartending and surfing days, he recently moved his firm from its Bryant Park office to a larger and more modern office closer to Central Park with views of the Hudson River.
“We’ve seen quite a significant interest from a lot of investors to join our funds or loans and it’s allowing us to grow. But that’s the catch: You have to grow in a sustainable way,” he said. “If you raise too much capital too fast, that burns a hole in your pocket.”
Instead, Eliasaf said he’s focused on raising smaller funds, at least compared to Northwind’s peers. The lending game is about consistency. He wants to hit singles, not home runs.
“I keep asking myself a very simple question, Does it make sense? And I think that markets move so fast these days; you have to ask yourself that quite often,” he said.
He’ll shapeshift if he has to, as he has before: Deals he made in 2008 stopped adding up in 2011, and the value-add deals he targeted during the 2010s no longer made sense in 2017. The firm kept evolving to the market.
“Credit for the last eight years is making a whole lot of sense,” Eliasaf said. “But when you lose track of it, and you start doing things just because you’re used to it… Markets move and they change, and people get caught off guard.”