Head of Structured Investments at Basis Investment Group
Are you bullish on New York City? If so, why?
We are long-term bullish on New York but see continued downside in the short- to medium-term. New York thrives on human interaction and, unfortunately, this pandemic has required a precipitous decline in physical interaction, dealing a big blow to the city we all love. New York’s well-educated and skilled population, vast economic output, varied cultural attractions, excellent education centers and global connectivity continue to make it a very viable destination for real estate finance and investment. The silver lining in this pandemic is that the decline in rents will make it more viable to live and conduct business in the city. In the long run, we see New York continuing to be a global magnet for talent and, hence, investment.
What strengths do traditional lenders and non-traditional lenders bring to the market today? Who’s emerging stronger post-COVID?
Non-traditional lenders, since their inception, have usually been able to offer borrowers more flexible capital solutions, quicker than traditional sources — especially in the middle-market, where we predominantly operate. As a result of the COVID-19 pandemic, many institutional banks had to pull back because of widespread challenges to their expansive portfolios, presenting opportunity for many non-traditional lenders who have taken advantage of this and provided liquidity in this market. While bigger banks have reentered the market in recent months, agile non-traditional lenders — especially those with a focus on workforce housing and middle-market — have grown their portfolio and relationships over the last year, and should prove to be even more competitive with traditional lenders coming out of this pandemic than before.
How has your underwriting changed post-COVID? Is there more of an emphasis on underwriting or asset management today?
Underwriting has been impacted by COVID-19. The uncertainty in the market has led to a sharper focus on downside risks, and has made us seek a bigger margin of safety resulting in lower leverage than before the pandemic. At the same time, we’ve formed new relationships with experienced sponsors who were not able to tap their usual sources of capital. Underwriting and asset management were always front and center in our platform working together with our originations team, and that strategy has served us well through this crisis.
Biggest overlooked market opportunity today?
Well, the biggest opportunities today may be in niche areas of real estate like cold storage, data centers, life sciences, and even cell towers, especially given the networks’ 5G plans. I will not say these sectors are completely overlooked, but there sure are fewer players competing for these opportunities. That said, over the years, I’ve learned to trust my gut and not look back. As investors, we are in the business of measuring risk, and then taking the best action we can, given the information we have at the time. At Basis, we have developed a strategy over many years of investing that is designed to make money in any market conditions. Nonetheless, having investment discipline means that you will always bypass some great opportunities, but you will also miss some colossal failures and that is OK. Also, there will always be new opportunities. No one investor will hit them all.
“When I’m not doing deals while working from home, you’ll find me…”
“…advocating for more diversity and inclusion in the CRE industry.”
Favorite TV show you binged during quarantine?
Have you eaten inside a restaurant post-COVID, and if so, which one?
Lupa in NYC (Greenwich Village)
Any new hobbies taken up during COVID?
Where is your COVID hideaway? ie, Hamptons or New York City or other?
At home in Short Hills, N.J.
Number of haircuts in past six months — family trim or professional?
One from wife, two professional!
Dream Zoom happy hour date?
Nikki Haley and Michelle Obama, not together!
Home office or actual office?
Two days, and three days
Have you been on a plane post-COVID? If so, where did you go? If not, where will you fly first?
No, hopefully to Vail for skiing!
Which will rebound first: retail or hospitality?
Favorite post-COVID secondary market from a lending perspective?
New York suburbs!