Reonomy, Convene Founders Launch Multifamily Lending Startup With $450M Funding Partner
The pullback of regional banks this year has left many small multifamily owners with limited financing options. In response, a trio of proptech veterans has launched a startup that aims to fill that gap, and it landed a big partnership to fuel its first round of deals.
Ease Capital — founded by Reonomy co-founders Charlie Oshman and Memo Sanchez and Convene co-founder and CEO Ryan Simonetti — has a tech platform the founders said allows them to analyze properties and underwrite loans more efficiently than the traditional lending process.
The New York-based firm announced this week it formed a $450M partnership with real estate investment firm Taconic Capital Advisors.
The partnership includes a $120M investment from Taconic that will be leveraged to originate up to $450M in loans, Taconic Director Eric Sitman told Bisnow. He said the firm plans to deploy that money over the next one to two years.
Oshman, Ease's CEO, told Bisnow in an interview this week that the Taconic investment is the first in a series of partnerships it plans to pursue with large lenders that don't usually do deals below $35M but are looking for efficient ways to deploy capital to that space.
Those smaller loans have typically been provided by local and regional banks, but rising interest rates and the fallout of the Silicon Valley Bank and Signature Bank failures have led them to dramatically reduce their activity. Ease and Taconic see now as the right time to step in.
"It’s an ideal moment in time, because not only are there new challenges facing sponsors that not all loan programs that are popular during a low-interest-rate environment solve for, but a lot of that capital is no longer available in the marketplace," Oshman said.
He said there is appetite from larger institutional players to provide that capital, and Ease is helping them deploy it into the market. It plans to provide a range of bridge financing options, and it can offer shorter terms, interest-only structures and flexibility on prepayment.
Taconic, a 24-year-old investment firm based in New York with $7B in assets under management, has often sought out distressed parts of the commercial real estate markets, lending to hotel owners in 2020 and office owners this year, Sitman said.
It typically provides loans of $30M or larger, but Sitman said the firm sees now as a "unique moment in time" to provide liquidity to owners that need it in smaller increments, and the partnership with Ease gives it a way to do that quickly.
"Most institutional capital that does have the ability to lend into this environment are focused on $25M or $30M and higher, so we’ve seen for the smaller deal size we can earn some additional spread relative to larger transactions," Sitman said.
The way Ease can do these smaller deals more efficiently stems from its system for underwriting loans, Oshman said. He said Ease's platform combines relevant data such as rents, operating expenses and supply in the market, and it uses that information to speed up the process for analyzing loans.
"What we have done is built a system that allows us to take the comprehensive underwriting that typically occurs after a borrower signs an application with a lender and move it to before an application," he said. "We do it upfront, and we’re able to do that quickly using analytical systems we’ve built for ourselves."
Sitman said he hasn't seen a multifamily lender use this type of technology platform before.
"They have new tech that allows us to have a pretty strong view of credit early on in the deal before doing a deep dive in underwriting," Sitman said. "We can deploy capital much more quickly because they’re effectively an offshoot of our team ... It allows us to be more efficient with our time and be able to deploy capital into a space where we see unique opportunity."
The creation of this tech-supported lending platform combines the experience of Ease's founders, who have backgrounds in proptech and real estate capital markets.
Oshman and Sanchez co-founded property data platform Reonomy in 2013. Oshman served as a vice president and board member until its November 2021 sale to Altus Group. Before that he worked in real estate private equity at New York-based DelShah Capital.
Sanchez, Ease's chief technology officer, worked at Reonomy until 2016, and he has also worked at DelShah Capital and as CTO at capital markets fintech firm dv01, according to his LinkedIn page.
Simonetti, Ease's chairman, co-founded Convene in 2009 and still serves as CEO of the flexible office and event space provider. Before that, he began his career in lending at Gramercy Capital Corp.
The trio began talking about the concept for Ease about 18 months ago, Oshman said.
"It's a space that is familiar to us," he said. "One of the things we talked about is when you build a business, how do you build competitive advantages for yourself ... how can you use technology and data to differentiate yourself?"
Sitman said he has known Simonetti for years and has gotten to know Oshman over the last six months. The Taconic team leading the partnership consists of Sitman, principal James Jordan and Director Catie McKee.
"Ryan is a natural leader. Charlie is as well," Sitman said. "Obviously, Charlie’s experience building Reonomy is a lot of what makes Ease Ease. Despite the partnership being in its infancy, we already have a good workflow with a pipeline meeting once a week, and we're in contact every day."
Ease is now working to bring on additional capital partners to fund more deals and grow the platform across the country. Oshman said it is looking to deploy between $250M and $500M next year and then scale up from there.