September 9, 2019
Spring Garden Lending, the provider of bridge financing to local real estate developers formed in late 2016 by former Valley Green Bank CEO Jay Goldstein, has expanded its operations into Washington, D.C. and entered into deals with Credit Suisse and OceanFirst Financial Corp. to fund their loans. Formed in late 2016 at 9th & Spring Garden streets in Philadelphia, the company caters to local developers who need short lead-times (three to four weeks) to take advantage of investment opportunities — but do not want to turn to expensive non-bank lenders.
It expanded into Baltimore last year and, Goldstein said, the response was so strong that it continued moving south into Washington. He said he was attracted to Washington’s diverse neighborhoods, robust universities and medical centers and brisk real estate market, which he expects will only grow stronger with Amazon opening its second headquarters there.
Earlier this summer, Spring Garden opened a small office at 1140 3rd Street NE, 2nd Floor in Washington, with only a business developer. It just closed its first loan there last week and plans to hire two lenders by early next year. For now, the company’s two Baltimore based lenders are servicing Washington clients from Charm City.
Spring Garden President Bob Marino, who oversaw expansion into Baltimore, will have the same role in Washington. Goldstein and Marino worked together at Valley Green, a highly profitable startup bank that was acquired by Univest Financial Corp. in 2014.
“We see the future of the company as a mid-Atlantic firm, stretching from central New Jersey south to Washington and west to Lancaster and Harrisburg,” Goldstein said. “Baltimore did so well and there was demand in Washington to do this.”
Goldstein said the Spring Garden experienced $250 million in loans over the last three years and anticipates issuing $100 million more in 2020. As a basis of comparison, he noted that Valley Green added between just $50 million and $75 million in loans each year.
To fund continued growth, Spring Garden Lending has entered into a relationship with a subsidiary of the international investment banking and financial services company Credit Suisse to fund Spring Garden Lending’s loans in the Baltimore and Washington, DC markets. It also received up to a $60 million warehouse facility from OceanFirst Financial Corp. — the last growing Toms River, New Jersey bank that recently opened its first commercial lending office in Philadelphia — to help the Spring Garden grow its market share in Philadelphia.
Credit Suisse will buy the loans originated by Spring Garden — who will continue to service them and earn a fee for doing so. Goldstein said he was introduced to OceanFirst CEO Christopher Maher through former partners at Capital Bank of New Jersey, which OceanFirst acquired earlier this year.
“They were interested in the type of lending we do and the type of clients we have,” Goldstein said. “And that wanted to be supportive.”
Spring Garden Lending creates its profit by charging about 9 percent interest — higher than the 4 percent to 6 percent charged by banks though much lower than the 12 to 15 percent charged by alternative lenders.
Privately-held Spring Garden earned $1.5 million in 2018 and Goldstein expects to do equally as well this year, if not better.