CO’s ‘Out of Office’ Series Finds Calm in Flowing Rivers With 3650 REIT

The commercial real estate industry, a relatively calm body of water, has experienced more than its fair share of ripples over the past few years.

The heightened market volatility it’s currently experiencing, however, is perhaps more akin to whitewater rapids — with market participants being put to the test as they paddle through rising interest rates and record-high inflation, and toward a looming recession.

While some lenders have pressed pause on transaction activity for now, others are holding steady. Further, they’re continuing to hunt for opportunities where they can bring their vast experience to bear, along with knowledge and skills learned through past cycles.

After all, there’s no clear end to the volatility in sight and, as Norman Maclean, author of the famous fly-fishing novel, “A River Runs Through It,” wrote: “Many of us would probably be better fishermen if we did not spend so much time watching and waiting for the world to become perfect.”

One lender who has perfected the art of fishing — in more ways than one — is Jonathan Roth, a managing partner and co-founder of 3650 REIT.

Roth fell in love with fly-fishing as a boy. Today, he also has more than 30 years of industry experience in his tackle box originating, structuring and servicing commercial real estate investments through up and down markets. He co-founded 3650 REIT — headquartered in Miami with additional offices in New York, Los Angeles, Dallas, Atlanta and Nashville, Tenn. — with Toby Cobb and Justin Kennedy in 2018, and the firm has been an industry leader in both originating and servicing loans since.

Commercial Observer’s Finance Editor Cathy Cunningham and Meridian Capital Group Senior Managing Director Drew Anderman traveled to Irwin, Idaho, to meet with Roth at his wife’s family’s fishing lodge, The Lodge at Palisades Creek, which sits on the south fork of the Snake River. Roth taught fly-fishing novices Cunningham and Anderman the catch-and-release sport, and also how he applies some of his tactics on the river to his lending role today (after all, “Teach a man to fish …” as they say).

Before they got into their waders, the three discussed the current market hurdles.

“Certainly it’s more volatile than it was last year, and capital is harder to access,” Anderman said. “Our job as a broker and adviser is always to steer clients to the best opportunities, which requires more work and is more challenging now.”

Roth concurred on the challenges faced.

“It’s volatile right now, so our job as a steward of capital is to identify opportunities on a  risk-adjusted basis where we feel comfortable to deploy capital — the opportunities where the value is not going to be eroded as a result of what’s happening in today’s world,” Roth said. He added that 3650 REIT is busy today wearing two hats as not only a lender but also an adviser, bringing a wealth of knowledge and perspective from the $14 billion in loans it services.

Meridian has its own boatload of data and experience to offer its clients, and Anderman said that the rocky market conditions mean that borrowers are gravitating to — and relying on — him for advice today. “They’ll say, ‘Drew, [which lender] should we go with in this environment, how should we structure this deal, can we achieve this?’ And it’s our job to give honest feedback, push the market and deliver the best results for our clients.”

Roth finds a lot of peace in fly-fishing today, and the Snake River is a place where many of his best ideas come to him — far from the hustle-bustle of his L.A. office. He also applies the same perspective he brings to fly-fishing to lending today.

“Like any business, your goal is to be as efficient and as productive as humanly possible, so you have to choose your shots,” he said. “If you’re fishing and  throwing thousands of casts all day long, you won’t catch any more fish and you’ll be tired and worn out. The goal on the river is to pick your spot, be precise and — like real estate — it’s all about location, location, location.”