Heads of Commercial Real Estate at Wells Fargo
What’s been the biggest market lesson learned during COVID?
Never underestimate the power of the Fed. While there are challenges in the CRE market today, the Fed’s actions to inject and promote liquidity, from cutting rates to quantitative easing to [term asset-backed securities loan facility] and everything in between, have helped keep cap rates range-bound. Despite the low amount of transaction activity, the Fed’s activity has helped maintain a floor on asset values. Separately, I would say one of the biggest lessons learned is the benefit of a robust portfolio management infrastructure to help early identification of problems and monitoring at-risk segments. Beyond that, there are definitely more lessons to be learned as the CRE market continues to digest and adapt to the impact of COVID.
Are you bullish on New York City?
To continue to be a CRE industry leader, you have to be a player in New York City. New York City will always have a significant impact on our business regardless of the cycle or circumstances. We have always been there for our clients and will continue to be there with our wide range of financing solutions to serve them well regardless of the environment. New York City has always been an evolving market and we will always be a participant. Despite expected challenges in NYC, as a New Yorker, I won’t bet against the city in the long run.
How are you winning the deals for which you’re competing today?
Maintaining strong relationships and trust from our borrowers will always drive success, particularly in times of stress. We will continue to underwrite loans to rigorous standards and ensure they are well-structured. Because of our strong relationships, we are able to regularly demonstrate our ability to deliver a comprehensive CRE platform that helps differentiate us from our competitors versus simply meeting the market. However, it is an evolving market situation that we continue to navigate.
How has your loan portfolio fared through the pandemic?
We maintain the largest commercial real estate portfolio in the U.S. banking industry. We are well-diversified by property types and geography, have a low leveraged portfolio with carefully selected sponsors who have been cycle-tested, and we have built concentrations in stronger markets. Pre-COVID, the portfolio was performing at historically strong levels, with an appropriate mix of assets and geography, with a well-capitalized customer base and overall low leverage. Losses and non-performing loans were at historic lows. We actively focused on reducing risk in certain areas prior to the COVID correction, given we were late-cycle and had concerns about retail. We also, fortunately, increased exposure to sectors that have actually experienced tailwinds due to COVID. As a result, we feel very comfortable with our portfolio. I would say that one early surprise was that springing reserves were not a useful mitigant during these unprecedented times, as there was very little time for these reserves to accumulate to be of real immediate value.
Which closed deal, post-COVID, are you most proud of and why?
Balance sheet deal: St. John’s Terminal. We closed a $973 million financing for developers Oxford Properties and [the Canada Pension Plan Investment Board] in early May as the lead lender. This syndicated construction loan will fund the revamping of the historic former freight terminal into a 1.3 million-square-foot Hudson Square complex. We were thrilled to lead this financing for the revitalization of Google’s home at St. John’s Terminal in the face of COVID, and we look forward to the positive impact it will have on the neighborhood.
CMBS deal: One Manhattan West. NYC office located in Hudson Yards District with Brookfield as the sponsor. Wells Fargo (WFC) was co-lead on Manhattan West 2020-1MW with DB, Citi, Barclays and [JPMorgan Chase]. It was the first large NYC office CMBS deal post-COVID and was met by very healthy demand from bond investors. The deal was significantly oversubscribed, and it was great to see these large institutions coming together and to realize the readily available demand in the market.
“When I’m not doing deals while working from home you’ll find me..”
“On my brand-new Peloton or spending time with my family to rest and recharge.”
Favorite TV show you binged during quarantine?
Have you eaten inside a restaurant post-COVID, and if so, which one?
Only one inside … P.J. Clarke’s on 55th and Third Ave.
Any new hobbies taken up during COVID?
Yes, Pickleball and eating.
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?
Only one, which was in the last few weeks … professional, of course. As if I’d let my husband cut my hair!
Dream Zoom happy hour date?
I am tired of Zoom.
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, Africa in March … glad we made it home, and we plan to go back.
Best book you read during COVID?
I wish I had time for leisure reading.
Which will rebound first: retail or hospitality?
Favorite post-COVID secondary market from a lending perspective?
Depends on the property type.