Head of Originations, Americas at Nuveen Real Estate
What’s been the biggest market lesson learned during COVID?
Biggest market lesson learned has been “staying calm in the pocket”. Real estate is a longer duration asset and generally lags the broader economy. Trying to make long-term decisions based solely on the immediate extreme volatility is not a recipe for success. We continue to take a longer-term view on real estate credit. We have identified and taken advantage of short-term illiquidity and gaps in the market, primarily in the lower leverage (65%+/- LTV) segment that had been dominated by the banks. Sponsors who needed to transact were willing to pay up (on a relative value basis) to execute on a new acquisition or refinance a pending maturity. We have been able to provide that liquidity at returns that are 100 to 150 [basis points] above, and at leverage levels that are 500 to 750 bps below, pre-COVID levels. We think this offers strong relative value and will allow us to scale our real estate credit business quicker.
Are you bullish on New York City? If so, why?
People generally vote with their feet and I continue to live in the city, which tells you something. That being said, I am not particularly bullish on NYC in the short to medium term. The affordability issues which predated COVID, coupled with the inability to enjoy all that the city offers, will continue to cause NYC to compete with other locations for young talent. This has only been accelerated by [work-from-home] and Zoom. People still want to feel physically connected, but the question is where? If you are coming out of college and you are offered a similar job in NYC, Austin, Denver or Nashville, I’m not sure in the short run NYC will continue to gain its fair share. However, longer term, NYC has considerable barriers to entry as a premier global city and will remain a cultural, financial and creative capital that attracts talent.
What’s key to New York’s rebound and recovery?
Biggest keys to NYC rebound/recovery will be: One, cleaning up the city and addressing the inequality and social justice issues. However, the city is not nearly as bad as some media portrays. Two, once the mindset shifts to NYC as a safe and secure place, businesses and employees should return, along with additional investment in the city, including the restaurants and small business which make the city what it is. However, this will require rents across both multifamily and retail to reset to address the affordability issues the city had pre-COVID. This should lead to, three, a more balanced recovery with more middle-class families deciding to remain in the city versus leaving for the suburbs. This will hopefully also help stabilize the tax base. NYC will rebound, but it will not, and should not, look the same as it did pre-COVID.
Which closed deal, post-COVID, are you most proud of and why?
A “bridge to sale” refinance of an office asset in Atlanta. It was the first transitional office deal we sourced and closed during COVID, and we liked the urban/suburban nature of the product, given COVID (i.e. mid-rise vs. CBD high-rise, drive to submarket vs. transit-oriented). Given the physical characteristics of the asset and the strong sponsorship with limited execution risk, it felt like the right COVID trade.
Biggest overlooked market opportunity today?
Urban/suburban office as a short-term trading play. Generally, these markets contain mid-rise versus high-rise product-minimizing logistics of moving employees into/out of the building during COVID. Also, these submarkets are generally less dependent on public transit, further easing COVID concerns. Finally, these markets are expected to benefit in the short term, as they have been/will be some of the first to return to the office and also benefit from any incremental demand from employers looking to diversify away from the urban core in the short term.
“When I’m not doing deals while working from home, you’ll find me…” (please complete this sentence)
“…moonlighting as the family Uber driver, taking my girls to school or the wife to the office a few days a week. Five stars, please!”
Favorite TV show you binged during quarantine?
“Fauda” – Season 3
Have you eaten inside a restaurant post-COVID, and if so, which one?
Yes – LT Burger.
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?
4 – One family, three pro.
Home office or actual office?
Have you been on a plane post-COVID? If so, where did you go? If not, where will you fly first?
Yes – Sea Island, Ga.
Best book you read during COVID?
“Billion Dollar Whale”
Which will rebound first: retail or hospitality?
Favorite post-COVID secondary market from a lending perspective?