Robert Rothschild

Is it better to be a lender or borrower today? 

This all depends on the asset class, business plan, market, vintage, etc. All lenders want bridge multifamily and therefore it’s become incredibly competitive, which has driven down spreads and pushed lenders to win with proceeds. If you can buy at the right basis, I’d say it’s better to be a borrower of multifamily today. 

On the other hand, it’s likely better to be a construction lender for multifamily today, as the yields are higher and justify the risk. 

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

We are starting to see lenders capitulate and move on, but there’s still a lot of 2021-2022 product that hasn’t been resolved yet. The idea that interest rates will bail out the borrowers isn’t coming to fruition, and with this latest interest rate hike I believe some lenders will act. 

There are, of course, a lot of lenders that have equity businesses where they haven’t been able to buy as much as they would have liked the past five years, and we will see these deals moving from one side of the house to the other.

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

We expect more loan sales ahead. Buying loans and working out a deal with the borrower to get control is today’s way of buying fee simple if you want to come in at a good basis.

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

We continue to be bullish on residential development loans, which include everything from multifamily construction to RTL and land banking. Today’s consumer wants everything to be new, and we’re leaning into that. 

We’re cautious about data centers given it’s still a relatively new asset class and the size of the transactions are extremely large.   

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

We try to be in spaces that are niche and don’t command a lot of competition. We win by being able to put ourselves in the borrower’s shoes and understanding what they need and why, and then structuring around that. When we have competition, it’s almost always from non-banks.

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

In any workout scenario, we always make sure to have Plans B and C (and sometimes D) figured out at the time of the modification. So, if we’re giving a borrower more time to execute on the business plan, but they fail, what happens next? We don’t want to go back to the status quo and need to build protection while we have the leverage.  

Is AI indeed going to kill us all? 

If I knew I wouldn’t be in real estate! I don’t think AI will necessarily put people that are experienced and knowledgeable out of jobs, but it is clearly enhancing efficiency and allowing for more nimble teams. We have seen the impact of AI in terms of accelerating the first steps of our due diligence processes and expanding our underwriting toolkit. 

Having said that, output is reviewed and signed off by the investment team. We view the enhancements within AI as complementary to the experience of the team.

Biggest headwind and tailwind to lending activity in 2027?

Biggest headwinds will continue to be geopolitical issues and interest rates. Biggest tailwinds will be advancements in AI and tech IPOs.

Lightning Round:

Super Bowl or World Cup? Super Bowl.

Orcas or yachts? Yachts. 

Best vacation you ever took? Peru.

Last time you said, “Phew, that was a close one!”? Five minutes ago. 

Sun Belt multifamily or Boston life sciences? Sun Belt multi. 

Fitness activity of choice? Padel.

Holiday wish? Lower interest rates.

“Power” song you listen to when mentally preparing for a big event/deal/day? Any Grateful Dead live set.