Spring Garden Lending identifies Baltimore as a city with a steady real estate market and great potential for growth.
Philadelphia-based Spring Garden Lending expands into Baltimore
Bob Marino (left) and Jay Goldstein are working together again after Marino joined Goldstein's Spring Garden Lending to manage its new Baltimore operations.
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 Baltimore and hired a familiar face to oversee it.
Bob Marino will join as president of the company’s mid-Atlantic region, with responsibilities for identifying and managing new markets starting with Baltimore.
“For us, it’s really exciting to re-team with Bob,” Goldstein said. “He’s an experienced banker and entrepreneur. And where he’s really terrific is with building sales teams and developing new markets.”
Comparing Baltimore to the city where Spring Garden makes its home, Goldstein said the Charm City appears ripe for development. “Like Philadelphia, it’s a strong renters market,” he said. “And that’s important for us because a lot of our customers are renovating and leasing properties. Baltimore has a significant tenant population and housing stock and limited lenders looking to do these projects for moderate income housing.”
Both Goldstein and Marino took executive roles with the Univest Corp. of Pennsylvania after the Souderton-based bank acquired Valley Green in late 2014. But Marino peeled off in January 2016 to start Broad Street Consulting Advisors, which provides sales strategy, coaching, training, sales search and marketing to financial institutions.
When Goldstein formed Spring Garden Lending later that year, the company became a client of Marino’s firm. And it was in that capacity that he asked Marino to investigate possible markets that would be ripe for expansion. Marino said he spent a few days a week in Baltimore to get to know the market and discovered that the city had quite a bit in common with Philadelphia. “Baltimore has had changes that are block to block,” Marino said. “It’s similar to the changes that Philadelphia underwent seven to 10 years ago, where we saw neighborhoods like Northern Liberties, Fishtown, Graduate Hospital and Brewerytown really grow. And they're lending with the speed of a hard money lender but pricing closer to a bank. I think it’s a market hungry for Spring Garden’s niche.”
Goldstein said he was less focused on whether Baltimore was a contiguous market and more enticed by the similarities to Philadelphia.
Reinvestment Fund will provide Spring Garden with a $7 million credit facility to help fund those loans in Baltimore. “The market has not been producing enough homes for families with modest incomes,” said Reinvestment Fund Managing Director Dana Johnson said in a statement. “Spring Garden Lending has a track record of working with small developers who do just that, so we’re excited to be supporting their expansion into Baltimore.”
Once Goldstein and Marino identified Baltimore, they moved quickly to find lenders in that market. They wound up hiring Brent D. McGraw and Pete Pecoraro, both former commercial lenders with Municipal Employees Credit Union of Baltimore (MECU Credit Union), who will respectively be senior vice president and vice president of commercial lending. Marino said the duo have a combined 50 years of commercial real estate lending experience and bring with them a built in client base.
The Baltimore office opened last week in the Hollins Market neighborhood at 875 Hollins Street, Suite 201. That neighborhood has been the subject of an ongoing redevelopment plan led by developer Scott Plank, the brother of Under Armour CEO Kevin Plank. Goldstein said Spring Garden leased about 2,000 square feet, which can accommodate up to eight people. McGraw and Pecoraro will bring some support staff, but Marino will also be spending three days a week in Baltimore and will be on the lookout for more lenders that fit with the company’s structure.
Marino, who has and will continue to serve on Spring Garden’s board of directors, said his consulting business was doing quite well — at one point it had eight bank clients. But the opportunity to work with Goldstein and many of his former Valley Green colleagues was too good to pass up. He will still do some consulting work for banks, but his main focus, at least for the next few years, will be growing the Spring Garden’s Baltimore operations. “Baltimore is an opportunity to do a lot of the things I enjoy most,” Marino said. “This has an entrepreneurial feel to it. I like growing things.”
Spring Garden provides short-term financing — usually between six months to two years — to borrowers who cannot wait the time required to receive permanent financing. The capital helps real estate developers and investors renovate properties to sell or rent for moderate income housing, at which point they could get permanent financing from a conventional bank.
With offices at 9th & Spring Garden streets, 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.
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.
Goldstein said the company produced about $75 million in loans — most in southeastern Pennsylvania with some in South Jersey and Delaware — during its first year of operation. That's a number Valley Green did not reach until its second year. He said the company has gone from 11 to 17 employees and has been profitable for quite some time.
Privately-held Spring Garden has raised $16 million in equity and $45 million in bank financing.
Jeff Blumenthal, Reporter
Philadelphia Business Journal