Tim Johnson

Tim Johnson

Global Head at Blackstone Real Estate Debt Strategies

Tim Johnson
By November 15, 2022 12:59 PM

Where in the capital stack are you most comfortable playing today, and where are you finding the best lending opportunities?

In our real estate debt business, we are seeing exciting opportunities throughout the capital stack. We generally focus on senior lending and mezzanine lending, and we are seeing some especially good opportunities today. The most active part of our business is lower-
leverage first mortgages, mainly through our insurance capital. The more opportunistic pipeline is building, but it will take some more time before those opportunities play out in scale. We’re starting to see a pipeline of exciting things like loan portfolio sales and recapitalizations as well as traditional lending opportunities. It’s going to be a very good environment for lenders like us to provide solutions to our broad base of customers. 

What’s your best piece of advice for borrowers seeking financing during turbulent times?

In today’s market, capital is available, but it costs more than people are used to. You need to have a good asset with strong prospects to generate growing cash flow. You also need to have great relationships and be willing to put in significant equity capital to show your commitment. If you check all those boxes, you should be well positioned. 

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. 

We are as focused as ever on financing high-quality assets in the right markets and sectors, in addition to supporting sponsors with an ability to navigate a challenging environment and fund additional capital, if needed. As we’ve said for some time, there is a bifurcation in the office space, with a trend towards high-quality, well-located assets, which is where we are focused within the office sector. Additionally, we continue to see strength in certain types of multifamily, especially in markets like the Sun Belt. 

What’s your take on an impending recession? How bad might it get, and what are the silver linings (if any)? 

I’ll leave the technical definition to others, but we can expect to see economic deceleration. The good news here is that there is less leverage and stronger consumer balance sheets, and the housing market is in a better position as compared to 2008 and 2009. At Blackstone (BX), we are confident in our platform, which has a long history of performing for investors through various cycles.

When will we reach the bottom of the market, and when will we see a thawing in the debt markets? ​

One thing we are all looking for is interest rate stability. Regardless of where rates settle, the stability will start the process of finding price transparency and market liquidity. 

 What would you do differently during the next pandemic? 

I hope we never have another pandemic, and the reality is you never know what the next crisis might look like. With that said, we can take lessons learned from the pandemic and apply them in the future. For example, COVID showed us how fast liquidity can shift, but it also showed us the advantage of using the significant amount of data we have from our $565 billion global portfolio, which can guide us through turbulent times.

What keeps you up at night, and what helps you sleep? 

My kids are getting older so I can’t use them as a cop-out here. … The pace at which the world is changing is extraordinary. When you look at where we have been over the past three years, it’s almost hard to comprehend. We are dealing with unprecedented challenges, many of which are totally new for our generation. That makes for environments full of risk and opportunity. Being able to tell the difference between the two is more critical today than I’ve ever seen in my career. Luckily, I can sleep well as I believe that we’ve positioned ourselves to benefit from this current environment by owning a floating-rate, high-quality loan portfolio that is well positioned for the world we live in today. 

Lighting Round: Would you rather…

Lend on New York office or take a job as a septic tank repairman?

We are big believers in New York, and we always have been. Late last year, we led the refinancing for 425 Park, a newly built, state-of-the-art property, which I was really excited about.

Traverse Jurassic Park on foot, or relive 2008? 

I lived through 2008 and learned a lot. I couldn’t say the same would hold true in the other scenario.

Run a marathon or swim in the Gowanus Canal? 

I have run a few marathons, including the New York City Marathon, so I’ll go with the devil I know.

Be a contestant on “American Idol” or be a contestant on “Survivor”?

There’s no chance you’ll see me on “American Idol,” so “Survivor” it is. 

Work remote 100 percent of the time or work in an office 100 percent of the time?

I’m a firm believer that we are better together. It’s essential for culture and talent development, and also for getting to the best outcomes for our investors. You can find me at 345 Park Avenue five days a week. 

Sit in L.A. traffic for two hours or sit in a stalled NYC subway car for 30 minutes? 

Having lived in both cities and experienced both, I’d choose the subway (or Metro North) any day because you can use the time to catch up on the news, solve a Wordle, read a book, or organize your thoughts for the day ahead. Not possible with two hands on the wheel. 

Fight 100 duck-size horses or one horse-size duck?

This feels like something I should ask my kids.

Work in a Michelin-starred kitchen or work in a McDonald’s? 

My personal experience lends itself a bit more to back of the house as a dishwasher, but, if I had to choose, I’d take the Michelin-starred kitchen. I bet I could learn a lot in that environment!

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