Peter Sotoloff.
Peter Sotoloff
Chief Investment Officer and Managing Partner at Mack Real Estate Credit Strategies
What’s been the biggest market lesson learned during COVID?
Unexpected black swan events should be expected by having a strong balance sheet that is not highly levered and cross-collateralized.
Are you bullish on New York City? If so, why?
Yes. I have lived in New York through several dislocations, including 9/11. Fundamentally, people want to return and will return over time, especially the younger generations of the workforce seeking the unique environment and set of experiences the city provides. But there will be fundamental changes in New York that need to be adjusted to.
What’s key to New York’s rebound and recovery?
Youth, energy, intellectual capital and culture are key, but we also need public policies that promote growth, employment and quality of life.
How are you winning the deals for which you’re competing most aggressively today?
Today’s market is a lender’s market, but relationships have always been key to our success.
How has your loan portfolio fared through the pandemic? Any surprises during asset management in the early days?
Our portfolio has fared well, overall. We have been gratified by our borrowers’ level of commitment to their assets. The surprise in the early days was softness, in what had been viewed as the safest and most resilient markets and asset classes. We have no retail, and modest hotel exposure.
Which closed deal, post-COVID, are you most proud of and why?
We closed a 100 percent recourse construction loan to a public hotel [real estate investment trust] for a property on the West Coast. With recourse, a great basis and good sponsorship, we were able to provide a solution for the borrower and limit our risk through structuring.
Any interesting anecdotes about a remote closing experience?
We did a remote closing dinner, where a 30-person group scattered across the U.S. ordered from our favorite restaurants and wine was shipped to each person. We could be together for a meal online in lieu of the usual in-person tradition.
What strengths do traditional lenders and non-traditional lenders bring to the market today? Who’s emerging stronger post-COVID?
Unlike the last crisis, banks today are in good shape, overall, but they are much more selective in their lending and, in general, seem fearful of real estate. This opens the door to a very strong alternative lending opportunity.
How has your underwriting changed post-COVID? Is there more of an emphasis on underwriting or asset management today?
We continue to adjust our views on the office of the future, and how lodging recovers and when. At the same time, we’re evaluating the attractiveness of major urban [central business districts] versus secondary [science, technology, engineering, and math] markets.
Do you feel urban living is dissipating as a result of COVID-19? Why or why not?
Statistics do not point to a specific conclusion right now. As rents adjust, there may be newfound demand in urban areas from users who were previously priced out.
“When I’m not doing deals while working from home, you’ll find me…”
“…with my wife, two kids and two dogs.”
Lightning Round:
Favorite TV show you binged during quarantine?
“Schitt’s Creek”
Have you eaten inside a restaurant post-COVID, and if so, which one?
No.
Any new hobbies taken up during COVID?
Astronomy
Where is your COVID hideaway?
Hamptons
Number of haircuts in past six months — family trim or professional?
Five, including one family trim and the rest by a barber wearing a mask.
Home office or actual office?
Actual office
Have you been on a plane post-COVID?
No.
Which will rebound first: retail or hospitality?
Hospitality
Favorite post-COVID secondary market from a lending perspective?
Nashville
