Toby Cobb

Has the can been kicked fully down the road when it comes to loan extensions, or is there more leg action to come? 

There will definitely be more kicking, but the dynamic is shifting. The better borrowers are coming to the realization that rates are not heading materially lower, and waiting for that outcome is no longer a viable strategy. If anything, the opposite is more likely. 

This revelation is beginning to drive more resolution activity (workouts, recapitalizations, asset sales) rather than the extend-and-pretend approach that has characterized much of the past two years. We expect this to continue to accelerate.

Which property sector is most attractive from a lending perspective today, and which are you most cautious about? 

I find myself drawn to the right office loans — well-located, well-capitalized assets with credible business plans are compelling at today’s basis — but am cautious about the wrong multifamily transactions. 

Generally speaking, however, it’s still more difficult to pick the winners in office. Multifamily has a strong long-term thesis, but the volume of distress in floating-rate loans originated at peak valuations is still working through the system. Those who are using AI to pick asset classes and underwrite transactions are gambling with their capital!

What’s your competitive edge in deals today, and who are you competing against most often (banks or non-banks)? 

Our edge is the combination of four decades of real estate ownership and operating experience alongside institutional-grade lending discipline. We think like owners and operators, and that shapes how we underwrite, structure and manage our loans from origination through resolution. 

Most lenders evaluate a transaction purely through a credit lens. We look at it the way an owner would, which gives us a more complete picture of the risk. We’re competing primarily against other non-bank lenders, but our ability to draw on real operating intuition (and to hold and service each loan we originate) is a major differentiator in a market where many are deploying capital without the depth of asset-level experience.

Do you expect more or fewer loan sales in the year ahead?

More. The recognition that we are not returning to a 2 percent Treasury environment has finally begun to set in for both lenders and borrowers. Banks in particular are moving past the extend-and-pretend posture that dominated the last few years and are beginning to “take their medicine” in earnest. That will likely mean more loan sales and more opportunities for well-capitalized alternative lenders to step in. 

In short, the bid-ask transaction volume is narrowing as sellers accept today’s reality.

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

Communicate with our borrowers consistently and proactively from day one.

Communication is one of the most powerful risk management tools available to a lender! Problems that surface late are always harder and more expensive to resolve than those identified early. Our servicing platform is built around this exact principle: We engage with every borrower across every stage of the loan life cycle for as long as it takes — up to 3,650 days if necessary. That continuity of our relationships is what allows us to identify risk early and act before more serious situations arise.

Is AI indeed going to kill us all? 

I wouldn’t describe myself as a full-on “doomer,” but I take the risk seriously. I believe there is a real chance that the systems we build become more difficult and expensive to control as they grow more capable. The cost of containment could be substantial in ways we aren’t yet fully accounting for.

Data Centers: As attractive a lending opportunity as they were two years ago? 

We have a niche approach to data centers. We don’t want to compete head to head with Blackstone, Brookfield, and the like. We have focused on powered land in infill locations.

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

I would bring my pole spear, a good knife and sunscreen! Spear-fishing would be absolutely key to my survival.

Lightning Round:

If you’d attended Taylor Swift’s wedding, what gift would you have given the happy couple? A pole spear.

Super Bowl or World Cup? Both.

Orcas or yachts? Yachts.

If you could train AI to do one new thing, what would it be? To be more like me!

Best vacation you ever took? The Out Islands of the Bahamas, on my boat.

Last time you said, “Phew, that was a close one!”? I did have a shark eat a fish off the end of my spear.

Conversions: “Keep ’em comin’” or “Sooo 2020 (scoff)”  Keep ’em comin.

Sun Belt multifamily or Boston life sciences? My business partner always says that a technology shift is “the most powerful force in economics” — I’ll take the Sun Belt multis!

Friend, marry, kill: Office, multifamily, data centers In exactly this order, but the data center I would kill would be a bomber.

Book reader or phone scroller/ email checker before bed? E-mail checker before bed, book listener (at 1.7x speed) during my morning exercise.

Describe your portfolio in one word? Safe.

Fitness activity of choice? Walking — FAST!

Holiday wish? For AI to remain under control.

“Power” song you listen to when mentally preparing for a big event/deal/day? “Snapback” by Old Dominion.