Josh Zegen

Josh Zegen.

Josh Zegen

Co-Founder and Managing Principal at Madison Realty Capital

Josh Zegen
By November 9, 2020 9:00 AM

What’s been the biggest market lesson learned during COVID?

There is no such thing as recession-proof real estate; you need a margin of safety in everything you do. No one would have ever underwrote a world shutting down all at once.

Are you bullish on New York City? If so, why? 

Yes. The city is more diversified today from a jobs perspective than ever before with tech, life science, media and entertainment, financial services, hospitals and universities. Because of this diversified economy, New York City will maintain its resilience and continue to attract the best talent. For all of the people and companies that could never access New York City, this is a pretty unique opportunity. While we can expect short-term disruption, I believe long term in the dynamism of the city.

How are you winning the deals for which you’re competing most aggressively today?

We have been in business for over 16 years. Madison is one of the few alternative real estate lenders that was around before the global financial crisis, so we have a unique understanding and experience through distressed cycles. At this point, we also have a client roster of repeat borrowers who understand our ability to provide certainty, flexibility and customized lending when it really counts.

How has your loan portfolio fared through the pandemic?

Many are dealing with asset management headaches during the pandemic, but we have fared relatively well. Our portfolio is heavily weighted with multifamily, and very little exposure to hospitality and retail. We’re also not burdened with leverage issues that saddled (and ultimately sacked) a number of mortgage REITs and debt funds with margin calls. We, traditionally, haven’t borrowed with repo or warehouse lines, choosing single-asset leverage instead to leverage our loans. We also have a diversified portfolio from a geographic perspective, given that we have offices in New York City, Los Angeles and Dallas.

Which closed deal, post-COVID, are you most proud of and why?

In early April, at peak crisis, we acquired a $170 million portfolio of performing multifamily loans from a mortgage REIT that was dealing with some margin-related issues. We closed the transaction in less than one week with everyone working remotely but didn’t sacrifice one bit of diligence. I was very proud of our team being able to execute this quickly and efficiently, given the properties spanned across Los Angeles, New York and New Jersey. I was really excited to have the experience, capital and team to execute a unique deal like this and capitalize on an opportune time in the market. 

What strengths do traditional lenders and non-traditional lenders bring to the market today? Who’s emerging stronger post-COVID?

Traditional lenders can, obviously, bring a cost of capital that is typically hard for non-bank lenders to compete with, in terms of rate, but non-traditional lenders are able to provide certainty, flexibility and more customization. From the traditional lending sources, Fannie, Freddie and HUD have emerged as the strongest sources of capital in the market, given super-low rates and a multifamily sector that has outperformed most other asset classes. However, non-traditional lenders have solidified their position during this pandemic as a reliable and flexible source of capital. Alternative lending was not as much a driving force during the global financial crisis because it was an early emerging asset class, but flexible capital will play a big part to help solve various problems for owners coming out of this cycle.

Do you feel urban living is dissipating as a result of COVID-19? Why or why not? 

I think urban flight is a short-term phenomenon that will reverse once a vaccine is readily available. Urban living will, of course, change and adapt, but there’s a reason cities exist. People who are attracted to cities value convenience, energy, professional opportunity, culture and diversity. All of that just doesn’t exist the same way in suburban living.


Lightning Round:

Favorite TV show you binged during quarantine?

“Fauda,” Season 3

Have you eaten inside a restaurant post-COVID, and if so, which one?

Catch Steak

Any new hobbies taken up during COVID?

Played a lot of tennis

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?

Six, both family trim and professional.

Home office or actual office?

Actual office

Best book you read during COVID?

“What It Takes” by Stephen Schwarzman

Which will rebound first: retail or hospitality?


Favorite post-COVID secondary market from a lending perspective?


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