In its first full year, Beech Street surpassed the billion-dollar mark, a record for an agency lender. "We doubled that performance in 2011 and in 2012, we are well on our way to continue this momentum," says Huebscher.

From the start, the firm's operating philosophy and business strategy set it apart from its counterparts. "It starts with the people," Huebscher says. "I know that sounds cliché, but it really is true. When I started the company, I knew it was a great opportunity to attract the best talent and provide superior service to borrowers who were unsatisfied with existing lending relationships. Being entrepreneurial and hungry for business gave us an advantage."

The development of the company followed a two-part strategy. Phase one involved building a strong platform, with the support of investors and a strong correspondent pipeline. Phase two involved building national direct business. Beech Street immediately invested in strong infrastructure with underwriting, legal and servicing, and quickly began lending to a deep pipeline via its relationship with Meridian—of which, incidentally Herzka is a founder and CEO. Then, Huebscher seized the opportunity afforded by a tumultuous market environment by handpicking seasoned originator teams.

"Some of our expertise comes from our experience with Fannie Mae and Freddie Mac, understanding how the agencies work and how to maximize the outcomes for our clients," Huebscher explains. "This whole philosophy of going above and beyond, with this sharp customer focus, sets us apart."

The strategy seems to be working. Beech Street now boasts more than 100 employees in 13 offices. The firm is also the recipient of the Freddie Mac "Partnership Award" in recognition of 800% volume growth and a growing FHA multifamily and healthcare pipeline.

But, as successful as the firm has been, its focus is not all about the deal. In fact, occasionally it makes deal-breaking choices for the good of its customers. "If our clients are having an issue with another lender or the agencies, we help them solve these issues—sometimes at the expense of business," Huebscher says. "For us, it's about longterm relationships."

Clients seem to agree. "Typically, the person you're dealing with in the lending field doesn't have much experience and doesn't want to learn," relates John Morris with Tramor Properties Inc., a borrower in San Diego. "It's entirely different with Beech Street. I learn from them a tremendous amount about the bond markets and how it all works. They're so open, honest, completely transparent."

This attitude starts at the top, particularly with Huebscher's leadership. "Grace is analytical and has uncommon judgment," says Fishman. "She never gets frozen, never shoots from the hip and doesn't overanalyze."

Because of this acumen, she's been nominated by a special panel of commercial real estate industry experts for the CREW DC Impact Award. It recognizes lifetime achievements in local real estate by a woman. And clients have similar praise for her leadership style.

"To come from a government agency and have the success she has had with a private firm like Beech Street is amazing," says Patrick Cadigan, a private investor and owner of multifamily properties in Orange County.

Cadigan found Beech Street the way many of the firm's initial clients have: by following the people it has brought on board. "I started working with Beech Street about a year-and-a-half ago," he says. "I had done business with Greg Reed and Kristen Croxton" SVPs who run the California office—"for many years, and Beech Street had hired them away from Deutsche Bank. I followed Greg after doing some checking about who was behind Beech Street."

Cadigan says that in a lending partner, he's looking for someone knowledgeable who can perform: "Some properties I'm dealing with are very expensive, and there's a lot of money on the table. The interest rate can fluctuate tremendously, so I need a Johnny-on-the-spot who can respond quickly. They're bright, sharp people."

Beech Street executives say their customers see that they're in it for the long term, and they execute for clients so that they'll keep coming back. Providing services that are customer focused—returning phone calls promptly and being knowledgeable phone calls promptly and being knowledgeable with impressive execution and a personal touch—makes them stand out.

Morris gives an example of when a seller changed its mind and wouldn't sell him a property after the loan was locked. "Beech Street connected me to the person who actually handles the paper, and there was no panic. They're cooperative and care for you as a borrower and want you to be successful."

Once a loan is closed, Beech Street's customers are serviced by a dedicated relationship manager from its servicing and asset management team. "At every level of the organization, we continually ask, What can we be doing differently?'" says Huebscher. "We have implemented feedback mechanisms for our customers to identify opportunities for improvement and retain areas of strength."

Beech Street's ability to see value in loans that other lenders may pass up is another distinguishing factor. Morris, who believes in rehabbing and repositioning properties, cites an example of a building that needed significant repairs and had been considered by many other major buyers. "Nobody would do the deal, but Beech Street looked at it and got it."

Fishman asserts that Beech Street is staffed in an unusual way to not screen loans out until they've been thoroughly examined. "Every loan we see is potentially a good loan," he says. "Even if a deal doesn't fit our appetite, it's not because we didn't look at it. We try to do a lot of business, which has allowed us to produce a lot very quickly."

With the multifamily market currently so volatile, the question of whether it's overheated is common. Huebscher answers, "Everyone hates to hear it, but it really is market-by-market. Overall, it's interesting how strong the multifamily market is, despite persisting unemployment and flat income growth. A lot has to do with demographics. You also have the disruption associated with the housing crisis, so there's a lot more renters by choice."

From a credit perspective, she believes the agencies have been appropriate in the way they've underwritten in light of the way the multifamily market has improved over the past couple of years. "The agencies are providing the majority of liquidity on the debt side, and they're being measured and appropriate. This helps calm some of the overheated nature of the market."

As far as debt goes, with rates dropping so dramatically and spreads tightening, borrowers are tempted to play the market, but there's still a lot of volatility, Huebscher asserts. "The Treasury can go up or down 20 basis points in a day. We tell our customers, 'There's enough volatility in the market, so don't try to time it. If you like your coupon on your mortgage, take it.' If you want to forward rate-lock in, now's a great time to do it with forward spreads at all-time lows."

And equity? "It's interesting; a lot of investors are trying to raise equity," Huebscher says. "There's lots of equity available on a macro level, but trying to put those partnerships together is sometimes the challenge."

She adds that the global nature of the markets is a double-edged sword in multifamily lending. "If global disruption leads to another recession, you could see multifamily stagnate or see another contraction in rent. But the global volatility is also a benefit in that in the agency space, people are having a hard time finding a place to put their money and their investments. There's big demand for Fannie, Freddie and FHA securities, which is causing spreads to tighten generally. To have treasuries dropping while spreads are also tightening is rare—and borrowers are benefitting."

Huebscher thinks there will be some sort of GSE privatization, and that retaining the federal guarantee at the absolute minimum is critical to maintaining stability in a broad array of markets across the country. "If we don't retain the federal guarantee, it could be like going back to the '80s, when banks and insurance companies were very selective about where they wanted to go and there were significant restraints on liquidity. Some people think CMBS is the answer, but that provides spotty liquidity over time. Investor appetite will be decreased if the federal guarantee is not there. The higher debt pricing will be passed onto renters, so renters will feel that. Increasing rents to pass on debt costs would not be beneficial to the economy nor to the performance of real estate."

The issue of the GSEs is another complex matter that will take some time to iron out, she says. "The good news is that a lot of people in the industry are focused on it. There are a lot of players participating. Lawmakers are starting to see that multifamily is one part of the GSE discussion. They're realizing the need to understand the issues so that there are not a lot of unintended consequences."

Looking ahead, Fishman says it's hard to pinpoint what's down the road for Beech Street, since much depends on the markets, but he believes little will change. "We set up our business to handle change," he says. "It's hard to handicap, frankly. Being nimble and prepared is important, and if we have to alter the balance sheet, we will. If we have to have new sources of capital, we will. We have to be ready to react to whatever they throw at us."