Presented By: JPMorgan Chase
JPMorgan Chase’s Jim Tenret on the Current State of D.C. Multifamily
Jim Tenret is the regional manager for JPMorgan Chase in Washington, D.C. Commercial Observer’s Partner Insights team spoke with him about the state of D.C.’s multifamily market and how JPMorgan Chase — the top multifamily lender in the U.S. — is supporting its clients through the cycle.
Commercial Observer Partner Insights: Share with us how you developed an interest in the commercial real estate industry.
Jim Tenret: I paid my way through college on merit scholarships, and one of my scholarship donors was a commercial real estate developer in Arizona who took the time to mentor me. I was blown away by his stories of building a successful company, his near brushes with bankruptcy in the late 1980s and early 1990s, and how he persevered through that cycle to emerge stronger and more successful on the other end. That really sparked my interest in commercial real estate.
What do you find fulfilling about working in the multifamily sector?
There are a few things I really like about the multifamily asset class, particularly in this environment. It generates cash flow — current yield is incredibly hard to find in this low cap rate environment, but you can still get a decent leveraged return on stabilized multifamily properties. It’s less volatile than some of the other asset classes, like retail or office. And smart operators can create real value in leasing and operations. That value creation angle is, to me, the most exciting thing about working in real estate.
Talk about how your three years with JPMorgan Chase has added to your financial knowledge and career development.
For most of my 20-year career, I’ve been on the equity side of commercial real estate. So, I was the borrower, not the lender. Since joining JPMorgan Chase, I have found that having an owner’s mindset really helps me to better understand the needs and priorities of our clients, including local expertise, execution certainty, speed, flexibility and relationships. I’ve also gained a new perspective on what it takes to deliver on these needs as a lender, including a relentless focus on client experience and process efficiency.
What is the state of the Washington, D.C., multifamily market right now?
On the whole, conventional multifamily has outperformed the other asset classes. It hasn’t been immune to the impact of the pandemic, but properties that were leveraged appropriately are still cash flow positive. That’s particularly true for multifamily assets that have been owned for a long time by owners who consistently reinvest in their properties.
How does the effect of the pandemic on the D.C. multifamily market compare with the effect of downturns like the dot-com bubble or the global financial crisis?
Our clients are long-term operators, and they tell us that the current economic and operating climate is probably as challenging as they’ve seen in the multifamily space.
Talk about how D.C. submarkets are doing.
In general, there seems to be a dislocation between asset values and near-term cash flows, with asset values outperforming cash flows. When we think about what’s driving that, I can point to three reasons: One is the thirst for yield that is unavailable in public markets. Second is that, over the last several decades, the D.C. metro area has been a relatively recession-resistant environment. And third, there’s a large amount of federal spending in D.C., and a lot of that stays local. So, all three of those elements are supporting asset values, even though near-term cash flows have declined.
Talk about what JPMorgan Chase has to offer both large, institutional clients and smaller businesses.
Our local coverage in D.C. serves the needs of real estate organizations ranging from publicly traded companies to owners with a handful of rental properties that they self-manage as a retirement nest egg. The value we bring to our clients is unmatched.
Working with the No. 1 multifamily lender in the nation, our clients can expect competitive rates, low fees and a fast, reliable process from a local team. Our clients also get access to financial solutions and resources across all of JPMorgan Chase, including treasury services and digital tools that can help them run their businesses more efficiently and effectively.
Why is JPMorgan Chase better positioned than its competitors to assure clients that business will progress throughout this perilous time?
We’ve been in the commercial real estate space in D.C. for nearly 20 years and through multiple real estate cycles. Our senior team in D.C. — Greg Werly, James Norton IV and Brett Macleod — have a deep understanding of the market and its opportunities, drivers, and local codes and regulations. We’re committed to the D.C. market, and we will continue to grow our operations here.
In 2018, we announced a major expansion plan to bring the full firm’s resources to D.C., including opening up to 70 branches, hiring up to 700 new employees, increasing lending and philanthropic investment, and opening a new regional headquarters. More recently, JPMorgan Chase announced a $30 billion commitment to advance racial equity, which includes $14 billion over the next five years to finance 100,000 affordable rental units in underserved communities. We are committed to supporting clients and communities where they live and work.
Is there anything you can say to younger people who are new to the business and wondering how they move forward from here given this disastrous year?
I think now is an incredible time to be learning the commercial real estate business. For established industry veterans, I would encourage you to extend yourself and mentor someone entering the industry. Likewise, if you’re new to the industry, I think it’s important to align yourself with a seasoned professional who can help guide you. Having a mentor is such an important ingredient to achieving success.