How Vertical Integration Unlocked Exponential Growth For This Leading Multifamily Lender
When Wedgewood, one of the leading acquirers of distressed residential real estate in the U.S., wants to provide multifamily investors with investment opportunities, it calls on the CIVIC Multifamily lending team. Established in 2014 to meet the needs of investors who don’t fit within traditional real estate lending criteria, CIVIC has quickly become one of the fastest-growing private multifamily lenders in the nation.
CIVIC provides mortgage brokers, borrowers and investors with funding for investment property acquisition and refinancing, from flipping distressed assets to bridge financing. The lender recently surpassed $1.8B in funding.
The secret behind CIVIC’s rapid growth over the last four years has been its integration with the Wedgewood team and its capabilities. CIVIC employs 130 people and currently lends in 14 states, offering investors one- to four-year loans that are competitively priced and funded using Wedgewood's asset valuation underwriting platform. Through the resources and reputation of a 30-year-old real estate firm, CIVIC Multifamily has been able to use the resources of a major institution to provide investors with efficient loan underwriting and certainty of execution.
“Having all these integral services under one roof allows us to be client-focused,” CIVIC Managing Director of Multifamily Brian Murphy said. “I am able to talk directly with key staff internally, which results in efficient and transparent communication back to our clients. I can get our underwriters and asset managers in a room pretty quickly to discuss a live deal. We can work proactively in-house to get out in front of challenges in a given transaction, and we’re able to pass these efficiencies to our clients.”
Companies seek out vertical integration across services when looking to optimize performance and grow market share. At a high level, this structure gives the company control over the entire production process, from initial conception to completion. The result is often reduced uncertainty in execution and faster completion times, leading to growth.
Vertical integration places CIVIC Multifamily within Wedgewood’s larger supply chain of CRE deal-making. CIVIC has access to decades of real estate valuation expertise and low-cost capital. With these resources, CIVIC is able to keep all operations in-house so loans are managed more efficiently.
These teams and businesses often find opportunities to bring their services together, collaborating with one another to reach an integrated solution. CIVIC provides discounts to borrowers, leveraging specific skills from each team. The firm has also brought in Wedgewood's in-house design team, Maverick, to specific projects, using design expertise to create resource books for property managers and investors.
“This vertical integration allows us to use each of our teams for what they do best,” Wedgewood Chief Strategy Officer Gary McCarthy said. “Once we started implementing this sort of strategy, we realized that the sum of our services is greater than the parts.”
The relationship is symbiotic: CIVIC Multifamily gets to grow its portfolio and navigate increasingly larger deals and Wedgewood becomes a one-stop-shop for CRE investors through CIVIC. CIVIC is pushing to do $1B in funding this year and the last four months will be crucial for multifamily, Murphy said. Having Wedgewood as an institutional resource signals to potential investors that CIVIC Multifamily is more than a startup.
When CIVIC started four years ago, there was some initial concern on Wedgewood’s behalf in allowing CIVIC to fund what was perceived to be competition, Murphy said. But over the last few years, there has been a strategic push for everyone to work together and collaborate on deals.
This included bringing CIVIC and Wedgewood together under one roof. When Wedgwood started 30 years ago, it was spread across five different buildings. The firm decided to purchase its own building to unify all the teams and allow employees to meet face to face. Focusing on collaboration and providing the space to support it has helped grow CIVIC exponentially, Murphy said.
Bringing different companies and teams together under one roof has proven to be a strategic move.
“The benefits we get from seeing other parts of the operation are really valuable,” McCarthy said. “The space and its openness provide for maximum collaboration. We’re always moving around the space, and connecting on real issues in real time.”
For full-service commercial real estate companies, vertical integration can be challenging but particularly beneficial. Many of these firms are composed of several teams with a wide range of skill sets, from developers and architects to lenders and investment sales. As companies like CIVIC expand, being under one roof with parent companies like Wedgewood will continue to help foster collaboration.
This feature was produced in collaboration between Bisnow Branded Content and CIVIC Multifamily. Bisnow news staff was not involved in the production of this content.