Canyon Partners’ Robin Potts Can’t Lose

Robin Potts has a unique perspective on the capital markets.

She is the chief investment officer at Canyon Partners Real Estate, a $12 billion subsidiary of Canyon Partners, a global investment firm with $28 billion in assets under management. 

All of which is to say that Potts works both the debt and equity sides of the capital stack. She also quarterbacks fundraising for her firm, including for Canyon’s U.S. Real Estate Debt Fund III, which in December 2024 closed at $1.2 billion in contributions. That handily surpassed its target of $1 billion, nearly doubling its predecessor fund. 

Potts sat down with Commercial Observer in late October to discuss her 20-year career, Canyon’s investment strategy, the secret to successful fundraising, and why plenty of opportunity still exists today on the recapitalization side.

This interview has been edited for length and clarity. 

Commercial Observer: How did you get into commercial real estate finance? 

Robin Potts: I started my career after college at Credit Suisse. I worked in the financial institutions group in their Los Angeles office, covering mortgage REITs and insurance companies and banks, so I got exposure to real estate lending through that coverage from an investment banking perspective, but I wanted to get closer to the actual asset class. 

And, so, when I was ready to move on from investment banking, I looked for opportunities at real estate private equity firms based in Los Angeles, of which there were only a handful of prominent firms at that time, and I was fortunate enough to be able to land an opportunity at Canyon. 

How would you describe Canyon Real Estate’s business model? 

Our real estate platform has both debt and equity strategies, and we focus on U.S. investments across the top 40 markets. We’re active across all of the major commercial real estate property types, but an outsized share of our activities tends to be within the rental housing sector. We’re unique in that about half of our investment activities are in the debt space and about half are within the equity space. 

So, we have a unique vantage point within the capital markets of being an owner and a borrower within certain strategies and a lender, as either a senior or subordinate lender, within other strategies. It’s a great way to be able to really have a pulse on market dynamics from either an equity or a lender perspective. 

Lending over the last several years has experienced some volatility. How did you handle the firm’s debt strategies in recent years? 

We’ve been an active real estate direct lender since the 1990s, so we have over three decades of history within the space versus, I would say, the rise of debt funds, which have only been around the last decade. So our best practices and approach has been established over multiple cycles, which I think is an advantage that we’ve had as we’ve figured out how to play across different challenges in the backdrop. 

But, over the last several years, the hike in interest rates, starting in 2022, resulted in a generational opportunity within real estate debt as the relative value of the return profile for debt versus equity changed very dramatically in favor of being a lender’s market. So we were able to really lean into that within a debt strategy that we’ve been deploying over the last several years. 

I think that vintage is particularly interesting as a result of those interest rate dynamics. And, of course, a lot of banks have had to pull back over the last several years following the regional banking crisis in 2023 as well as the continued Federal Reserve pressure from a capital charge perspective, and also the continued Federal Reserve pressure on banks to rightsize their overall commercial real estate exposure. So it’s been an excellent backdrop to be a lender. 

Do you apply the same strategy with your equity investments, or does that require a different type of calculation? 

Within equity, we’re currently active in an opportunistic equity strategy, and set up to take advantage of the distress and opportunistic situations that are rolling off the balance sheets set up at the peak of the market that now need to be reset and unwound. We’ve been seeing some really interesting situations on the equity side for recaps that are being forced by maturing debt, or note sale opportunities from lenders who are underwater, or from acquisitions of assets that are being forced by limited partner investors who are eager to get their capital back at the end of a fund life versus continuing to extend. 

We’re finally seeing that the patience of people just granting extensions is wearing out and seeing a lot more situations that are quite interesting on the opportunity site. 

Your firm is a big multifamily player. What’s been the strategy there?

We have a strategy that’s able to go across property types, so it’s not multifamily only. But I would say over 50 percent of our exposure is multifamily because we’ve been excited about those fundamentals, in particular, over the last several years. And it also is consistently the most liquid part of the market from an exit point of view. So, when we’re thinking about how we’re going to get repaid, you have the breadth of lenders, including agency financing that’s available once the asset’s stabilized, or on the exit from a buyer perspective. 

We’ve been most active in multifamily, but also in student housing and senior housing. Those have been themes that we like, and we invest in a variety of types of multifamily — everything from garden-style apartments to high-rises, and, from a geographic perspective, we’re open to the top 30 to 40 markets from a population-size perspective. 

And then we’re constantly tracking the demographic and economic drivers within those markets, so, at certain points of time, we’re excited about a portion of those and less excited about a different portion of those, and that’s constantly evolving. 

Canyon’s U.S Real Estate Debt Fund III recently closed with $1.2 billion, surpassing your target and doubling the predecessor fund. What contributed to its success? 

In terms of being able to double the size relative to our predecessor fund, I think that’s really a reflection of the fact that we have an excellent track record within the debt space. We’ve been a consistent player in the space for many, many years. And having a stable set of repeat borrowers, having a low loss ratio within our track record, and being able to demonstrate that consistently to investors over time, I think, really resulted in Fund III being a successful fundraise. 

We’ve been very active in deploying that fund, so, from a deployment-pace perspective, we’re on track and I think we’ve built a great portfolio within that vintage. 

How would you describe the sources of capital?

We have a global investor base. It spans sovereign wealth funds, large Asian investors, endowments, corporate pensions, foundations. It’s a broad, broad mix. 

I know opportunity zones are also part of strategy. How do you anticipate deploying capital into that realm?

We were active in the last iteration of opportunity zones. We invested across about $1.8 billion in opportunity zone projects, highly weighted toward multifamily assets. With opportunity zone investments, you need to do typically ground-up development and then it turns into a long-term hold format. So we capitalized over 4,000 units within that space across the country, with really top-tier development partners across that portfolio. 

The whole program [initiated by the federal government] resonated with us because it plays off the need to have expertise in development, which is an area where we’ve been active for a very long time, out of both our equity and debt strategies. 

Why?

Because we’ve been a very active joint venture partner for developers over the years. Opportunity zones are about being able to work with established development partner counterparties across the country, and that’s something that we’ve been doing for a very long time. 

So we’re excited for Opportunity Zone 2.0. Obviously, the program really doesn’t go into effect until 2027, so we’re watching it very closely, but the bill preserved a lot of the best tax benefits with some tweaks around the edges. We’re excited to see where the new census tracts shake out when those get announced toward the end of 2026, and excited that it’s become a permanent kind of opportunity set on a rolling basis. 

Who were some of your mentors in your career who helped pave the way for you, especially as a high-ranking woman in commercial real estate?

The founders of the firm at Canyon have been unbelievable leaders and mentors, growing a number of the partners here today as internal folks, who have grown within the firm, rather than external partner hires. I’ve really been able to have the opportunity within Canyon as the firm has changed and evolved over time to be able to take on more and more responsibility. 

And the founders of the firm, Josh Friedman and Mitch Julis, have been obviously giants within their careers, within the greater credit industry. So I’ve been really fortunate to be able to learn from the two of them. 

What’s the best advice you could give about success in commercial real estate finance? 

Early in your career, raise your hand to get exposure across every aspect of a deal’s life cycle. It’s a common tendency for originators, which is where I started, to only want to be originating and not find the asset management or investor relations components as attractive to be involved in. 

But, ultimately, real estate is a full life cycle investment strategy, and so getting experience across as many touch points as you can for business plans, I think, is the best way to tackle it. 

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