Head of Real Estate Debt Strategies at MetLife Investment Management
What’s been the biggest market lesson learned during COVID?
Sponsorship integrity, pride in your asset, and reputation matters when the going gets tough. Solid initial underwriting and asset selection drives success through cycles.
Are you bullish on New York City?
I’m bullish from the standpoint that there will be attractive opportunities for equity investors to take advantage of the post-COVID market environment to find significant long-term value and outsized equity returns. As a lender, I am more neutral. We continue to be constructive on New York City as we see areas of value, but it’s important that we remain disciplined in our underwriting and structuring of loan opportunities in the current market environment.
What’s key to New York’s recovery?
A reliable COVID vaccine and treatment plan that enables the city to once again become the vibrant, exciting and efficient city that we all love, both from a professional and a personal standpoint.
How are you winning the deals for which you’re competing most aggressively today?
Long-standing borrower relationships and certainty of execution are two critical drivers that have enabled us to complete more than $3.5 billion in originations for 1H 2020. Year after year, we track our repeat business ratio within our commercial mortgage loan platform, and it usually falls within a range of 70 percent to 85 percent of the deals we do. Those sponsors that have borrowed from MetLife Investment Management (MIM) in the past have seen the value in that relationship, our stable lending platform, and our regional expertise; and they continue to execute new business with strong certainty that we will deliver.
How has your loan portfolio fared through the pandemic?
The portfolio has fared quite well, thus far. Our commercial mortgage portfolio is concentrated in high-quality assets in larger primary markets. These loans are typically to the larger and stronger institutional sponsors who are better positioned to effectively manage assets through periods of stress. Not surprisingly, there has been modest stress in our hotel and retail loan portfolios, consistent with what we have seen across those sectors more broadly. I remain confident that our real estate debt portfolio is positioned to successfully weather this downturn, as was the case during previous downturns.
Is there more of an emphasis on underwriting or asset management today?
Led by the insights of MIM’s dedicated real estate research team, we adjusted underwriting assumptions as the pandemic started by decreasing rent growth rates, increasing cap rates and discount rates, and underwriting higher economic vacancy and collection losses. We have also implemented additional collateral-specific underwriting sensitivity analyses to address COVID-oriented risks, thereby, giving our investment committee a more holistic view of the credit in question. Lastly, there is always emphasis on asset management as it is part of MetLife Investment Management’s risk management culture. The only operational change during COVID has been allocating even greater resources to asset management in terms of our mortgage portfolio.
Biggest overlooked market opportunity?
First mortgage lending over 65 percent LTV if you have confidence in the “V” and a long-term perspective. There are also a growing number of opportunities in the hotel sector. The market is negative on both hotel and retail assets, but our view is that the path to recovery for hotel assets is more certain, and may occur quicker, than the recovery in retail.
“When I’m not doing deals while working from home, you’ll find me…”
“…insanely attempting to conquer the mental and physical sides of golf, and spending quality time with my wonderful wife and our dog Murphy.”
Favorite TV show you binged during quarantine?
“The Match: Champions for Charity with Tiger, Phil, Tom Brady and Peyton Manning”
Have you eaten inside a restaurant post-COVID, and if so, which one?
Yes. The Top in Gainesville, Fla., and Piedmont Ale House in Burlington, N.C.
Any new hobbies taken up during COVID?
Where is your COVID hideaway? (i.e., Hamptons or New York City or other?)
Number of haircuts in past six months – family trim or professional?
See photo. I’m self-groomed.
Dream Zoom happy hour date?
All three of my wonderful daughters, who are away at college.
Have you been on a plane post-COVID? If so, where did you go? If not, where will you fly first?
No. Likely to the West Coast to see my parents.
Best book you read during COVID?
“Winning the Battle Within” by Dr. Glen Albaugh
Which will rebound first: retail or hospitality?
Favorite post-COVID secondary market from a lending perspective?