Jai Agarwal

Is it better to be a lender or borrower today? 

A lender. Interest rate volatility is creating real uncertainty around asset prices, and in that kind of environment, we feel better being the lender. You can protect your downside, build a diversified portfolio, and boost returns with attractive bank and CLO financing. Real estate loans are also more liquid than the properties themselves.

That said, we believe we’re in the later innings of the cycle, and attractive equity opportunities are starting to emerge as some owners capitulate and lenders look to reduce exposure. Also, there is very little new supply coming online, and high construction costs are limiting the future pipeline. In multifamily specifically, owning a home costs far more than renting, which keeps rental demand strong. And the economy remains fundamentally solid. All of that should push rents higher. For opportunistic, patient capital, ownership has its own advantages.

How are projections for higher-for-longer interest rates impacting your lending strategy today? 

First, we’ve become more defensive in our approach. With the volatility we’ve seen, we’re running more scenario analyses to make sure every deal holds up across a wider range of rate and valuation outcomes. 

At the same time, higher for longer works in our favor in some ways. It should increase the appeal of our bridge product. Property owners will be hesitant to lock in long-term debt, like CMBS, priced off of today’s Treasury rates, and bridge financing provides flexibility while they wait for a better window. 

Similarly, a significant portion of our existing portfolio is composed of stabilized properties that have already seen success in their respective business plans. As borrowers will be reluctant to refinance into longer-term fixed-rate loans today given the rate environment, we expect to see the benefit of these de-risked loans remaining on our books for longer. And, since many of these loans were originated in a higher-spread environment, these generate superior risk-adjusted returns relative to what we can originate today.

What is the most important thing you’ve done as a lender to protect your loan portfolio over the last year? 

We’ve doubled down on two things: strong, repeat sponsorship and exit underwriting. Specifically, I cannot stress enough the importance to us of agency exit underwriting. Before we close a loan, we want confidence that the borrower has a realistic path to take us out. On a bridge loan, the exit matters as much as the entry. These disciplines have served us well. 

Our loss rates have been amongst the lowest when compared with the broader market, which tells us we’re focused on the right things, and we plan to keep it that way.

If you were marooned on a desert island, which three items would you bring, and what would be your key survival skill? 

I have some experience with this, having grown up at a boarding school in a remote mountainous region. I’d bring a Swiss Army knife, a sturdy pair of shoes, and a photo of my family. My survival skill is resourcefulness. You make the most of what you’ve got.

Biggest headwind and tailwind to lending activity in 2027?

Headwind: Rising rates will make it more difficult for projects to pencil, which will likely slow down overall transaction volume. 

Tailwind: Lack of additional construction in the pipeline will drive positive absorption, concession burn-off, and rent growth in formerly oversupplied markets.

Lightning Round:

Super Bowl or World Cup? World Cup (once every four years).

Orcas or yachts? Yachts.

If you could train AI to do one new thing, what would it be? Cook healthy meals every day.

Sun Belt multifamily or Boston life sciences? Neither.

Friend, marry, kill: Office, multifamily, data centers Friend office, marry multifamily, kill data centers.

Book reader or phone scroller/email checker before bed Book reader and some emails.

Describe your portfolio in one word? Solid.

Fitness activity of choice? Hot HIIT Classes.

Holiday wish? World peace and a 4 percent 10-Year.