Urban Standard Capital Grows $200M Credit Facility With Western Alliance Bank

Urban Standard Capital has deepened its relationship with a major Arizona bank. 

Commercial Observer can first report that Urban Standard Capital has increased its aggregate financing capacity for transitional commercial real estate loans with Western Alliance Bank — a Phoenix-based regional bank with $90 billion of assets — to $200 million through three separate funds. 

The two lenders began their business relationship in 2020. 

Seth Weissman, founder and managing partner at Urban Standard Capital, a New York-based CRE private credit firm, told CO that the coordinated lending capacity has steadily increased from $40 million to $125 million over the last six years. 

He added that he expects the credit facility to continue to aid his firm in making loan originations to sponsors for tailored financing projects, which have typically fallen into the $15 million to $20 million range. 

“It’s a capital partnership that allows us to lower our cost of capital and be able to be more flexible and service our clients better,” said Weissman. “It helps me to deliver speed and flexibility to our borrowers and increases our capacity for lending.”

Weissman could not estimate a number of loans the credit facility will ultimately provide, as he noted that the facility recycles each time previous loans pay off. 

“If I invest $200 million, and a loan pays off for $20 million, I can draw that money again, and I’ll probably turn this money over four times, so it’s probably $800 million of lending power over the life of the arrangement,” said Weissmann. 

Since beginning its business in 2014, Urban Standard Capital has originated $2.3 billion in loans for more than 260 real estate projects. 

“That progression didn’t happen overnight,” said Weissman. “It was earned through consistent performance, disciplined underwriting, and delivering on what we said we would do.”

Ian Hawk, New York market manager for Western Alliance Bank, noted in a statement that his firm has “built a strong relationship” with Urban Standard Capital over the last several years and characterized the deal as a mutually beneficial business relationship. 

“We’re excited to continue supporting the firm’s growth as it expands its lending platform and provides flexible, competitively priced financing solutions to commercial real estate borrowers across the country,” said Hawk. 

The partnership further underscores the complex relationship between commercial banks and private credit lenders in today’s marketplace. 

Weissman noted to CO that while his firm receives a lower cost of capital from the partnership, Western Alliance Bank gives itself greater protection in terms of its deposit base when it comes to lender finance by leveraging Urban Standard Capital’s experience making its own loans. 

“Conceptually, it’s safer for them to make a loan to Urban Standard than to make that same loan to someone else, lending directly to borrowers,” he said, adding that his bank has both a decade-plus of experience making loans and managing large sums. 

“I’m managing the entire process for them, they have lower attachment points, and a lower risk profile,” added Weissman. “Because if I’m lending $20 million [to a real estate deal] and $10 million is from Western Alliance, they get their $10 million back first before I get any of my money back.” 

Weissman also emphasized that the partnership reflects two broader macroeconomic trends: Commercial banks prefer to make loans to other lenders, and those same banks prefer lending to experienced borrowers. 

“They now have two layers of borrowers, so from a risk perspective it’s much less risky, and they have priority of payments,” Weissman said. “There’s lots of tourists in the private credit space … a bank like Western Alliance, they don’t want to back random people in business for five minutes. … They want to partner with people who have a proven track record.” 

Brian Pascus can be reached at bpascus@commericalobserver.com.