Kevin Cullinan
Managing Director and Co-Head of Credit Strategies at Mack Real Estate Credit Strategies
Where in the capital stack are you most comfortable playing today, and where are you finding the best lending opportunities?
Over the past six months, we have seen returns rising in the senior tranche. In some cases, we are exploring unlevered senior loans because of the strong relative value as compared to other parts of the capital stack. In general, we see some of the more compelling risk-adjusted lending opportunities are on recent vintage multifamily and industrial properties in higher growth Western and Sun Belt markets.
What’s your best piece of advice for borrowers seeking financing during turbulent times?
My best advice for borrowers during turbulent times (and calmer markets) is to be transparent with lenders, treat them as partners, and work together to find solutions. We are here to help create win-win deals with good sponsors, and to do that we need to know everything the borrower knows about the deal and the local market.
Would you rather finance a well-established sponsor on a Class B office renovation in New York City, or the first-time developer of a multifamily project in the Sun Belt today? Discuss.
It’s an interesting question, but given the hypothetical either/or choice I would tend toward the Sun Belt multi-
family deal. In that scenario we could lean on the Mack organization’s internal, national development capabilities to help set up the project for success. And, at present, we have a higher conviction in the long-term value of Sun Belt multifamily than NYC offices. Clearly this is a generalization, and the facts and circumstances of individual situations could change our analysis.
What’s your take on an impending recession? How bad might it get, and what are the silver linings (if any)?
My view is that we’re experiencing a capital markets-driven slowdown. Supply and demand, rents, employment and other fundamentals remain strong in relation to the property types and markets we’re investing in. The economy remains strong overall, and I’m hopeful there’s not an overcorrection through rates.
When will we reach the bottom of the market, and when will we see a thawing in the debt markets?
Bottom-calling is a treacherous sport, but my personal feeling has been that we’ll see that in the second half of 2023.
What would you do differently during the next pandemic?
I hope we don’t have to figure that out for a long time.
What keeps you up at night, and what helps you sleep?
If anything keeps me up, it’s the unknowns across our portfolio, the things we can’t control despite our best efforts on each deal. But the support and capabilities of our team, including the broader Mack platform, helps me sleep well. We are proactive in managing our deals, and I know that we’re in touch with our borrowers to address issues as they come up.
Lighting Round: Would you rather…
Run a marathon or swim in the Gowanus Canal?
Depends on how long in the Gowanus.
Be a contestant on “American Idol” or be a contestant on “Survivor”?
“Survivor.” Nobody wants to hear me sing.
Work remote 100 percent of the time or work in an office 100 percent of the time?
Office 100 percent — as someone with a 1-year-old at home, it’s not even close.
Sit in L.A. traffic for two hours or sit in a stalled NYC subway car for 30 minutes?
L.A. traffic.
Fight 100 duck-size horses or one horse-size duck?
One horse-size duck.
Work in a Michelin-starred kitchen or work in a McDonald’s?
McDonald’s, all day long. A busy Michelin-level kitchen may be the only place with more pressure than the capital markets.
