Category: Market Info

Fast on the heels of building its first full-sized dairy/grocery store on Long Island in East Farmingdale, Stew Leonard’s is planning another superstore in East Meadow.

The Norwalk, Conn.-based chain has plans to build its second full-sized Long Island location at the East Meadow Mall on Front Street, in the 70,000-square-foot space last occupied by a Pathmark supermarket that closed in May 2013, according to industry sources. Stew Leonard’s already had two of its wine stores here, in Carle Place and Airport Plaza in East Farmingdale, where it began construction of its 60,000-square-foot dairy store this spring. The newest Stew Leonard’s would join co-anchor Marshalls at the East Meadow center.

The family-owned regional chain – once called “the Disneyland of dairy stores” by The New York Times – currently operates four dairy stores. It has three in Connecticut – Norwalk, Danbury and Newington – and one in Yonkers. Stew Leonard’s began with a 17,000-square-foot Norwalk store in 1969, soon after patriarch Charles Leonard’s nearby Clover Farms Dairy was paved over by a highway project. The original store was expanded several times before a second store, 130,000 square feet in Danbury, opened in 1991. A year later, the company earned recognition from the Guinness Book of World Records for having “the greatest sales per unit area of any single food store in the United States.”

Today, the Stew Leonard’s chain, now headed by Charles Leonard’s grandson, Stew Leonard Jr., boasts annual revenues that eclipse $300 million. The East Meadow lease is being negotiated by Jeff Nable of Jericho-based Ripco Real Estate and the shopping center’s Valley Stream-based landlord Serota Properties. Neither would confirm nor comment on the Stew Leonard’s deal.

At Airport Plaza, the Stew Leonard’s is replacing Dave & Buster’s which vacated the space—the East Farmingdale center’s second largest next to Home Depot—after its lease expired with landlord Kimco Realty in February. The Stew Leonard’s at Airport Plaza is slated to open early in 2016. Stew Leonard’s previous attempt to build one of its full-sized stores in East Farmingdale in 2003 was unsuccessful. The chain wanted to build a 150,000-square-foot store at the intersection of Route 110 and Conklin Street, next to Airport Plaza. But the management of adjacent Republic Airport and some aviation groups complained that the store would lie in the flight path of Republic’s runway.

A proposal to move the store to a site 1,000 feet to the south didn’t fly with Stew Leonard’s or the Town of Babylon, and the project fizzled.

When you have a good idea, it’s generally good advice to sleep on it. But Gregg Richard, CEO of P.C. Richard & Son, slept on one big idea for three years before rolling it out. Now other people are sleeping on it.

While the more-than-a-century-old independent chain based in Farmingdale routinely adds products, it a year ago almost to the day began selling mattresses at a few stores.

The firm will have mattresses in 56 of its 66 stores (including a dozen of 19 Long Island locations) within a week and anticipates mattress “galleries” in all its stores within two months.

“We felt we were sending our customers to our competitors, because we weren’t giving them the choice,” Gregg Richard said. “Now that they have a choice, they’ve proven to us that we were right. They’d rather buy from us.”

The firm is rolling out the mattresses more rapidly than planned, because Richard said the category has been “successful beyond my wildest dreams.”

“Because of the success last year, it was an all-out team effort to get these open as quick as humanly possible,” he said.

It might be an irony that mattresses are proving a way to wake up sales, which weakened in some categories. Customers still flock to P.C. Richard & Son for refrigerators, stoves, ovens and appliances, but some buy electronics, well, electronically.

“The electronics business isn’t what it used to be,” Richard said. “The computer, home-office category hasn’t been terrific, but we’re still doing fairly well. If our customers want something, we’ll be there to sell it to them.”

While to an outsider, selling mattresses may seem a departure, some bed frames and mattresses involve technology. And when people buy houses, they often need refrigerators, TVs and a place to sleep.

The firm, which says it’s “changing the way you buy a mattress,” sells Sealy Posturepedic, Stearns & Foster, Optimum and Tempur-Pedic as well as other brands.

“The most difficult part of the mattress business is operational,” Richard continued. “You need showrooms. We have them. You need great salespeople. We have them. You need advertising. We have it. You need a warehouse. You need trucking, home delivery, drivers and helpers. We have it. And we have the loyal customers.”

Other appliance and electronics retailers already went into the bedding business, such as Conn’s HomePlus, RC Willey, ABT, ABC Warehouse and BrandsMart USA.

“I talked to these guys. They said it’s a good business,” Richard continued. “I’m friendly with most of them. I kept pushing it off.”

The firm got requests for mattresses on customer cards filled out in stores. Then it tested the concept, tucking mattress “galleries” in the back of seven Connecticut stores a year ago. Mattress galleries sprouted in spaces used for stockrooms, rather than displacing items.

“We were able to break through the walls and make the stores a little bigger,” he said. “It required a lot of capital to get in the business. It forced us to look at every store. And when we went in to do the mattress galleries, we gave many stores a facelift.”

The company, which paid for renovations out of funds from operations, sells 20 different mattresses in its 10,000-square-foot Rego Park, Queens store and 35 in the 50,000-square-foot Riverhead store.

“Each store is different,” he said. “We have enough of a section, so our customers can make an educated decision.”

The retailer offers mattresses and bedframes ranging from under $200 to $10,000. Some frames offer massages, go up and down and include USB ports, phone plugs and chargers.

Although the firm says it will match others’ prices, it provides information about the product, including how it’s built, hand stitching, foam and oils. But comfort is king.

“It’s what you’re comfortable on, what you’re used to sleeping on,” Richard said.

He assumed customers would want to test mattresses, but he’s finding many choose convenience, buying online.

“I thought people would educate themselves, come into the store,” he said. “The business we do online without people ever lying on a mattress is amazing.”

Although some customers are surprised to see P.C. Richard’s softer side, Richard says his firm evolved, initially selling hardware, adding appliances in 1909 and by the 1930s and 1940s selling TVs.

“We started as a hardware store. We don’t sell hardware anymore,” Richard said. “We’ve changed our business model many times. Microwaves used to be a gigantic part of our business. VCRs. That turned into DVD players. CD players were big. It changed to the iPod and Wi-Fi.”

Executives have moved back and forth between appliance and electronics and mattress retail, bridging the two businesses. The former CEO of Bosch Appliances is president of Serta and a former Whirlpool executive is a top executive at Sealy Posturepedic.

“Lots of customers come in to buy a mattress and wind up buying something else too,” he said. “Maybe they buy a TV. It’s the advantage we have. We have lots of categories.”

P.C. Richard delivers on its promises, charging $49 for delivery, set-up and disposal of old mattresses, although it periodically offers free delivery.

And it’s expanding into the fitness business, selling Fitbits and trackers that measure steps, heart rate and calories, as well as home security and automation equipment, including smart thermostats and devices that use phones to unlock doors.

It sells home-office desks and some furniture used with TVs, but don’t expect the chain to turn into a furniture store.

“We’re not at this point selling dining room sets or couches,” Richard said. “We’re not looking to expand deep into home furnishings.”

The store expanded its slogan from the “appliance, TV, electronics giant” to “the appliance, TV, electronics, mattress giant.”

“The mattress business is very similar to our business,” Richard said. “The peak times are really the same holidays.”

The store competes with specialty retailers such as Bethpage-based Sleepy’s and department stores, but Richard believes his firm is simply expanding its niche.

“I’ve been competing with people for 105 years,” Richard said. “Most of them aren’t here. Competition isn’t new to us.”

There is a risk that a customer unhappy with a mattress could be turned off to the store and that online orders could be cancelled. But Richard isn’t losing sleep over possible problems, as the firm finds money hidden under mattresses.

“We’re in business to make customers,” Richard said. “We’re not in business to try to make an extra-quick buck for the short term.”

U.S. companies stepped up hiring in May, a private survey found, evidence that employers remain confident in the economy even after it contracted at the start of the year.

Payroll processor ADP said Wednesday businesses added 201,000 jobs last month, up from just 165,000 in the previous month. April’s increase was the smallest in a year and a half.

The figures suggest that the economy is recovering after it shrank at a 0.7 percent annual rate in the first quarter. On Friday, the government will issue its official jobs report for May. Economists forecast it will show that employers added 227,000 jobs, and the unemployment rate remained 5.4 percent.

The ADP survey covers only private businesses, however, and frequently diverges from the official figures.

Construction companies added 27,000 jobs, ADP said, while manufacturers cut 5,000 jobs. The drop in factory jobs likely reflects the impact of the stronger dollar, which makes U.S. goods more expensive overseas and cuts into export sales.

Other recent reports have painted a mixed picture of the economy. Consumers remain cautious and are reluctant to spend their savings from lower gas prices, which are about $1 a gallon cheaper than a year ago. On Monday, the government said consumer spending was unchanged in April. Instead, the savings rate rose to 5.6 percent from 5.2 percent.

Yet Americans were willing to spend more on cars last month. Auto sales rose 2 percent in May to 1.64 million cars and trucks, according to Autodata Corp. That was the fastest sales pace since July 2005.

And a survey of manufacturing firms showed that factory activity grew at a faster pace in May than the previous month, driven higher by more new orders and greater hiring.

Overall, analysts expect the economy will expand at about a 2 percent annual pace in the second quarter. That would leave growth in the first half of the year barely above 0.5 percent, down from a 3.6 percent in the second half of last year.

Cincinnati-based retail giant Macy’s Inc. is facing pressure to make some changes to its real estate strategy, Reuters reports.

Several hedge funds have asked Macy’s (NYSE: M) to sell more of its major stores and lease them back in a fashion that has benefited several other major retailers in recent months.

Macy’s and its financial advisers are listening to shareholders’ ideas on the matter but haven’t made any decisions yet. So far the company appears to be more interested in reducing its margins in its real estate portfolio as its management is concerned that a sale-leaseback strategy would burden it with expenses that would hinder its profitability and weaken its overall finances.

One of the properties hedge fund managers have highlighted for potential sale is Macy’s flagship Herald Square location in New York, but sources told Reuters that move is unlikely because of the location’s value as a tourist attraction and the role it plays in Macy’s identity and brand.

Macy’s owns 447 of its 823 stores along with several offices that have a total book value of $7.8 billion.

During the company’s first quarter earnings call, CFO Karen Hoguet said the company’s real estate strategy may have been carried out “over simplistically” up to this point and said a review of its holdings along with possible strategies is underway.

Macy’s operates 885 stores in 45 states, the District of Columbia, Dubai, Guam and Puerto Rico under the Macy’s, Bloomingdale’s, Boomingdale’s Outlet and Bluemercury brands

As Amazon.com prepares to launch a same-day delivery service by drones that will spearhead online shipping to new heights, a 19th-century mode of transport for heavy and bulk commodities is alive and growing again on Long Island.

The New York & Atlantic Railway (NY&A) runs about a dozen locomotives across 269 route lines, exclusively on Long Island lines, from Bay Ridge to Montauk, hauling everything from lumber to biofuels and beer.

The short line freight railroad made news recently after one of its cars derailed and crushed signal machinery, the rebuilding of which caused delays for several days on the Ronkonkoma line. But the company’s ongoing role as the lifeblood of the roughly 80 companies it serves is perhaps lesser known.

“We’ve become an integral part of every business we service because there is a tie between what they do with what we do,” NY&A President Paul Victor told Long Island Business News from the railway’s main freight yard in Fresh Pond Junction.

The railway primarily carries materials for construction, including vast amounts of aggregate used to make asphalt for roads and cement for construction of high-rise buildings in Manhattan. The other commodities it hauls include lumber, drywall and brick.

“All together, that’s a significant amount of our traffic base,” Victor said. Among NY&A’s customers is the Brooklyn-based D&M Lumber Products, which deals in wood products for wholesale and retail distribution from Bushwick and Maspeth. The company, which typically works directly with lumber yards, is part of 25 route miles of freight-only LIRR line that the railway operates in Brooklyn and Queens.

“We bring in products to our facilities and reload them on to customers’ trucks that are deliver to people in the New York and Brooklyn area,” said Assaf Packin, D&M’s director of new business development and strategy.

In addition to the Brooklyn-Queens component, LIRR’s rail network is divided into two other parts. One involves a passenger-only line, such as the tracks that run between Penn and Jamaica stations, where freight customers are non-existent.  The other allows freight and passenger trains to share the same lines that include neighboring tracks that consists of short, disconnected spans.

In 1997, NY&A was launched as part of a private concession to operate freight trains on LIRR’s lines. As part of a long-term lease agreement, the railway pays the public commuter railroad revenue based on its carloads. NY&A is an affiliate of Anacostia Rail Holdings and is among sixshort line freight railroads that the Chicago-based corporation owns and manages. Its entire system links to all states, as well as Canada and Mexico. When NY&A launched, the number of annual carloads was about 10,000; that number last year hit 28,000.

“You always have economic cycles that go up and down, but largely speaking the company has almost tripled its traffic over the life of the concession so far,” Victor said of NY&A’s growth.

Another customer, Elm Global Logistics, is a Brentwood-based warehouse and shipping transfer facility that also receives freight from trucks, although it has moved toward using more rail. ELM deals mainly in cornmeal manufactured in Texas, Indiana and California that is shipped to the company’s 500,000-square-foot facility, from where the products are distributed throughout the East Coast. The company also handles by rail rolled paper, lumber, and General Mills products, including Quaker Oats.

“There are a lot of things that we do via rail that is slowly increasing,” said ELM owner Bill Conboy. Conboy noted that while in past decades many companies found it more cost effective to use freight trucks after the industry underwent deregulations, the pendulum has started to swing back to rail.

“There are many commodities that it pays if you buy in bulk, especially if they are manufactured in middle America or the West Coast, to put on rail, because it’s a lot more cost effective,” he said.

The average freight car’s capacity is equal to about 4 to 4.5 trucks, and the deferential in gross fuel efficiency is roughly about 4 to 1, according to Victor. D&M Lumber Products, for example, switched to rail deliveries in 2007, after trucks that arrived from New Jersey and beyond proved too costly in terms of tolls and other expenses.

“Depending on the freight rate, it’s usually about a 30 to 35 percent savings in freight alone,” Conboy said of trains compared to trucks. “Our customers usually see a significant benefit by using the rail.”

Conboy added that despite the significant savings from rail, transport by train takes more time. Many companies no longer want to hold inventory and want to receive materials in a relatively short time span.

“Some companies do both: they’ll ship in trucks if they need something quickly, or they’ll send it on rail and save a lot of money if they don’t have to have it by tomorrow,” he said.

The combined freight rail traffic on U.S. railroads was 28.6 million carloads, containers and trailers, an increase of 1.2 million unit or 4.5 percent over 2013 and the highest annual total since 2007, according to an end-of-year report of the Association of American Railroads.

The Brookhaven Rail Terminal, a privately-funded “transload” terminal on 28-acres of land in Yaphank, also serves multiple customers since it started to receive NY&A freight trains in 2012. The terminal handles mostly bulk flour that is used primarily by bakeries on Long Island, delivered on about 35 rail cars per month. The terminal deals heavily in lumber for a number of companies, including Medford-based Triangle Building Products, Riverhead Building Supply and Home Depot.

BRT President Jim Newel said that in the terminal’s first year of operation, it handled nearly 500 freight cars; last year it received 2,000 cars. “It has doubled in each of the three years it has been in operation,” Newel said.

Victor noted that NY&A is a common carrier open to any company that can meet its net contents for bulk traffic. Some customers have invested in tracks that connect their facilities to LIRR’s lines. ELM has tracks that run inside its facility that existed when the company in 1981 moved into its building, a former Hills Supermarket distribution center.

“When they connect our track to their track,” he said, “it’s like their connecting to a phone company or power company.”

Arrow Electronics Inc., once Long Island’s largest public company by revenue, is shrinking its local work force again, a spokesman said Thursday.

The electronic-parts distributor plans to relocate 150 jobs, mostly in its finance, legal and transportation-services departments, to the company’s headquarters in Colorado, said spokesman John Hourigan.

That would leave 265 Arrow employees on Long Island, compared with as many as 1,000 the company once employed here. In 2011, Arrow moved its headquarters from Melville to Colorado, where its chief executives lives.

Hourigan said the relocations would happen gradually over this year and into early 2016 “to into early 2016 “to minimize any disruptions.”

 

170 Michael Drive, Syosset

Stark Carpet, which specializes in high-end carpets, rugs and textiles, has leased 17,500 square feet at 170 Michael Drive in Syosset. The company is relocating from a 5,000-square-foot space nearby. Jeffrey Jurick and Jeff Schwartzberg of Woodbury-based Premier Commercial Real Estate represented the tenant and the landlord, Taub Development, in the lease transaction.

135 Fell Court, Hauppauge

Vicon Industries, a designer, manufacturer and marketer of video systems and components used for security, surveillance and safety purposes, has leased a 30,185-square-foot building at 135 Fell Court in Hauppauge. The company is relocating from Edgewood, Jack O’Connor and Robert Polito of Newmark Grubb Knight Frank represented the tenant and Harry Stavro was the in-house representative for landlord Rechler Equity Partners in the lease negotiations.

170 Wilbur Place, Bohemia

Bradley Marketing Group has leased 15,000 square feet at 170 Wilbur Place in Bohemia. The company, which specializes in websites, promotional products, printing, warehousing and creative design, is relocating from 135 Fell Court in Hauppauge, Richard Cohen of Ashlind Properties represented the tenant and Harry Stavro was in-house representative for landlord Rechler Equity Partners in the lease transaction.

999 Stewart Ave., Bethpage

Pro Unlimited, a workforce management service provider, has renewed its lease for 10,643 square feet at 999 Stewart Ave. in Bethpage. Pro, based in Boca Raton, Fla., has six offices worldwide, with Bethpage as the company’s Northeast headquarters. Ralph Guiffre and Robert Seidenberg of CBRE represented the tenant and Wachtler Knopf Equities represented landlord Sterling Equities in the lease renewal.

65 Knickerbocker Ave., Bohemia

TJK Properties has bought a 17,000-square-foot industrial building at 65 Knickerbocker Ave. in Bohemia for $1.million. Michael Zere of Zere Real Estate Services represented the buyer and the seller, DIC Corp., in the sales transaction.

1419 Osborne Ave., Riverhead

Eastern Baseball League has leased 2,150 square feet of retail space at 1419 Osborne Ave. in Riverhead. Kevin Welsh of Zere Real Estate Services represented the tenant and Dennis McCoy of NAI Long Island represented the landlord, Perusso, in the lease negotiations.

165 and 195 Froehlich Farm Blvd., Woodbury

Leon Chiropractic Method and Health Solutions leased 1,564 square feet at 195 Froehlich Farm Blvd. in Woodbury and Dr. Karen Schwartz, an endocrinologist, leased 1,937 square feet nearby at 165 Froehlich Farm Blvd. Jeff Jurick of Premier Commercial Real Estate represented the tenants and Carlton Wenz was the in-house representative for landlord RXR Realty in the lease transactions.

 

 

What was the best thing that happened to you or your firm in 2014?

As a new firm, founded in October 2013, we have proudly begun to build a solid foundation and reputation as one of the top commercial real estate brokerage and consulting firms on Long Island.

And as one of the “easiest to do business with.”

What was your most notable project, deal, transaction or personal achievement in 2014?

The establishment of Premier Commercial Real Estate and our Website to assist our customers and fellow “Brokerage Partners”, in all aspects of our profession; whether Tenants, Brokers, Owners or purchasers. We believe, more than anything else, “Timing” is the most important and critical dynamic in Commercial Real Estate. And along that line, we are confident that our “Timing” is perfect for creating a unique company that has the skills, talent and professionalism to satisfy todays participants.

What are you looking forward to accomplishing in 2015?

Building upon our recent and substantial successes. We are a highly skilled and experienced, professional organization prepared to support the most complex challenges in a simple and direct fashion.

What are some of your real estate predictions for 2015?

2015 is expected to be another active year for both purchases and leases. We expect interest rates will probably rise a bit, which should act as an additional catalyst for continued strong demand to purchase buildings. In other words, we expect even stronger demand from any purchasers who have been “watching from, and waiting, on the sidelines” as they will realize that continuing to wait may not be in their best interests as rates begin to rise. An “interesting dynamic” that we feel, is likely to occur in the upcoming year. Additionally, we believe strong leasing demand will result in greater challenges for Tenants who will seek our services to assist them in securing space with the greatest value to support their business requirements.

 

 

 

 The New York Real Estate Journal recently sat down with Jeff Jurick, director at Premier Commercial Real Estate, for a question and answer session.

Q. What motivated you to make a professional career change and enter the field of real estate?

A. While building our family business, Fala Direct Marketing, we made the decision to invest in real estate that would house our growing business. During the 80s and 90s, we made investments in our business and real estate which created long-term value. I managed our real estate portfolio as part of our day-to-day business, gaining insight into what matters most to other real estate investors. Since selling our businesses in 2005, I’ve continued to consult in both marketing, while managing our holdings in Melville, NY. During 2008 and 2009, I oversaw the renovation of 80,000 s/f for a new tenant in one of our properties. I enjoyed the experience and it prompted me to consider learning more about real estate and pursuing it as a career.

Q. As the president &CEO of one of the nation’s largest direct mail companies, what types of properties were you managing?

A. Our properties included commercial and industrial space ranging from 10,000 to 150,000 s/f. I worked with the towns that provided favorable incentives for labor programs, as well as sales tax savings on our yearly capital investments in technology and equipment, which were well in the high seven figure range. Suffolk County assisted us with training programs and incentives for hiring and training. At our peak, we had 700 employees. Competition for skilled labor was fierce, so our property selections were based on where we could access the best labor pool.

Q. How does your experience as a president & CEO of a large national organization benefit your real estate clients?

A. My experience leading a multi-office, national organization exposed me to many of their needs. From site identification, production planning, process flow, office and warehouse layouts, to working with the municipalities and utilities, I was intimately involved in the same issues and responsibilities many corporate real estate officers and C-level executives face. One of the most rewarding and highly visible projects I worked on was the partnership between our company, New York State and the Long Island Power Authority (LIPA) in the development of the largest solar system on Long Island – a 1.1 megawatt system which is still up and running on two of our sites today and which saves over 200,000 kHz per site. We saw the clean energy and ability to produce 25% of our own power as a win-win for everyone, and agreed to participate in the program which was funded by our company and the New York State Energy Department under then Governor Pataki’s administration.

Q. Do you believe your former experience gives you a competitive advantage?

A. There’s no doubt that, with 35 years of experience, overseeing four operating business units, I gained extensive knowledge and insight into manufacturing, warehousing, distribution, quality initiatives and much more, allowing me to quickly understand their operations and facility requirements. On the real estate side, I also benefited from building good relationships with other property owners, developers, brokers, as well as a broader network of professionals, all of whom have helped me to continue to succeed in real estate. I learned that surrounding yourself by the right team members is the key to success. I am confident that I have done that here at Premier and through my many relationships.

Q. You were courted by several real estate firms. What made you join Premier?

A. I’ve worked with managing principal Jason Miller since 2005 on projects for our properties. We often talked about starting a new firm some day. Miller, who I believe is one of the best hunters for properties and tenants, introduced me to managing principal Jeff Schwartzberg. When I met Schwartzberg, it was like meeting a “Pro’s Pro.” He listens, asks the right questions and helps me to develop the best course of action for our clients’ needs. He has taught me how to best quickly assess a client’s needs. Since joining the firm in November, a day hasn’t gone by where I haven’t learned something new.

Q. What’s one of the best lessons you’ve learned?

A. I’ve been fortunate to have worked with some of the area’s top brokers on several real estate transactions. They taught me a lot; most importantly, ask the right questions, listen well, plant a new seed every day and have patience.

Q. Since joining Premier, what have been some of the highlights?

A. Among the highlights was securing my first exclusive representation, which came through a friend. Dealing with friends could put more pressure on you, but I turned that into energy to find the right tenants for this particular site. A few months after signing the exclusive agreement, I placed my first leasing tenant of over 17,000 s/f to a long term deal. That was my major highlight to date and I hope many more to follow.

Q. Are you focusing on any particular types of properties and/or target markets?

A. My primary focus has been on industrial properties for sale or lease, medical project development, medical offices, and site location representation.

Q. You are known for being very active in the community. How are you leveraging your community involvement in your real estate career?

A. My wife, Lisa and I share our family’s tradition and role in giving back to the community. Lisa works on projects for The Ronald McDonald House of Long Island and I am still very active as a Trustee for North Shore-LIJ Health System. It’s been an honor and privilege to sit on the NSLIJ board and learn from one of the most talented businessmen in healthcare, Michael Dowling – which I apply in my real estate career, especially when serving physician groups. I am also still active in Children’s Medical Fund of New York (CMF), for which I served as chairman from 1980 to 2003. Through CMF, I have a tremendous network of prominent business leaders. As a member of the Syracuse School of Management Advisory Board, I am able to remain on the leading-edge of new business trends and developments, which gives me additional insight into the needs of the marketplace.

Q. When you are not facilitating real estate deals, how do you spend your off time?

A. Golf has always been a passion of mine. But I really love spending time traveling with my family whenever we can all be together.

 

 

 

 

 

Banks are expanding asset-based lending operations – and establishing new ones – as they target new customers that have long been in the sights of specialized finance companies.

After 25 years spent exclusively serving larger corporations, Citibank has expanded its asset-based lending to midsized companies. Short Hills, N.J.-based Investors Bancorp, which operates six Long Island branches, and Manhattan-based Signature Bank, which operates seven Island branches, both launched new asset-based lending operations late last year, while other national lenders – including San Francisco-based Wells Fargo and North Carolina-based Bank of America – are busier than ever with asset-based lending.

Asset-based lending by 35 of the biggest such lenders rose about 9 percent, to more than $200 million, in 2013, up from $183.5 million in 2012, according to the Commercial Finance Association, a Manhattan-based trade group. About 24 percent of the association’s members are banks, while 76 percent are not financial institutions, but “there are many more bank-based, asset-based lenders than there used to be,” according to Neil Seiden, managing director of Port Washington financial adviser Asset Enhancement Solutions.

“A good part of it has to do, I believe, with the recession,” Seiden said, noting asset-based lending gives banks a tool that can be particularly useful during difficult times.

In this type of lending, companies pledge assets against loans, including accounts receivable, inventory, machinery and even real estate. Banks monitor the value of these assets more closely than with a typical loan, making sure the collateral’s value remains and allowing the banks “to do a deal they typically wouldn’t do,” Seiden said.

Investors Bank CEO Kevin Cummings agreed this helps “to broaden Investors’ banking capabilities,” while Signature CEO Joseph DePaolo said asset-based lending “strengthens our product offerings” to private business.

Asset-based lending also provides a nice profit boost over other forms of lending, since these loans typically carry higher interest rates than traditional loans.

“We think from a credit perspective, it’s fundamentally sound,” said David Viggiano, Investors Bank’s senior vice president and head of asset-based lending. “The yields are marginally higher than typical commercial and industrial lending.”

But they also can be more costly for borrowers, who must provide a steady stream of updated financial information.

“There’s more monitoring and reporting to the lender,” Seiden said. “But the additional reporting gives the lender comfort and allows them to extend more credit to the company.”

To that end, asset-based lending requires a certain expertise, which allows lenders to value and track changes in asset values.

“We do a lot of testing and monitoring,” Viggiano noted.

But “generally, assets have proven to be good forms of collateral,” Viggiano added, and while banks make these loans to a wide range of clients, Investors Bank extends many based on inventory and receivables – particularly to manufacturers, service providers and information technology companies.

Investors Bank Senior Vice President Joseph Costanza referenced a Long Island manufacturer that replaced a $13.5-million traditional credit facility with a $19.5-million asset-based loan from another financial institution.

Seiden said he’s seen several clients shift from traditional loans to those based on assets. Banks typically charge more than for conventional lending, he noted, but typically “less than a non-bank lender.”

While an underperforming economy has made asset-based lending more popular, an economic recovery could also lead to greater asset-based demand.

“As the economy becomes more robust, there’s a need for working capital financing,” Viggiano said. “As credit strength improves, there’s greater demand.”