Alex Cabria

Describe the past 12 months in one word, and describe the key lending opportunities your team uncovered. 

Dynamic. It has been constantly shifting and at times unpredictable. The industry’s turbulence created opportunities for growth at SMBC. The team remained committed to our strategy and diligent in our approach. We have a long-term, optimistic outlook with our top institutional clients who remained active throughout this last year, particularly in the multifamily housing and industrial asset sectors. The supply-demand balance for multifamily properties remains strong in many high-growth markets with supply absorption showing signs of stabilization in certain markets with a lot of newly constructed properties, and the industrial sector shows similar promise, though you might not see the same rapid growth rate as in the last few years. Our focus has been on making thoughtful lending decisions in regions we believe will remain viable for these and other asset classes in the long term as this most recent cycle continues to evolve.

What’s surprised you most in 2024’s lending landscape? 

I think we can all agree that 2024 has been a strange year for the lending landscape. We at SMBC have been incredibly active throughout this year, while also being diligent and strategic in the types of deals we have done. The most surprising factor to me in 2024 has been the vast swing in the market in terms of the amount of lenders and cost-effective capital pouring back in over the past few months. Early in the year, the market was still adjusting and doing some soul searching, where many lenders were still on the sidelines, only dipping back in occasionally. Lately, we have seen a surge of lenders coming into the market, with capital to deploy, and getting more aggressive in terms of structure and pricing, ultimately leading to an extremely competitive marketplace at this point in the year.

How does distress continue to play out in 2025, and how can lenders best protect themselves? 

I think most would agree that there will continue to be distress in 2025 heavily skewed toward over-levered product and concentrated primarily on certain asset classes and in certain markets, but there is more optimism right now as opposed to 12 months ago. Some are still going through portfolio and market challenges, but at this point most of those issues have been identified and a plan has been put in place to deal with them. Our focus remains on lending on resilient asset classes and markets that are positioned for sustainable growth. Maintaining a conservative leverage position, backed by thoughtful and high-quality capital, is essential for success.

Are rate cuts the silver bullet the industry has been waiting for to solve all woes? 

Rate cuts will be helpful to the industry across the board. Deals will begin to pencil, and borrowers will likely be more inclined to develop and acquire properties, which should open up the capital markets even further. With that said, a balance needs to be achieved. There are certainly markets where oversupply and weakened fundamentals have been a concern. Office is an asset class that seems to be improving for high-quality, amenity-rich and well-located buildings, but no one has a crystal ball. While rate cuts will ease the pressure on the general “borrowing” cost, there are still areas of caution. These need time to stabilize, and cutting rates alone will not be the cure.

Are you still as enthusiastic about multifamily as you were three years ago? 

Yes, I am. But as a lender you need to pick your spots and be extra diligent picking which submarket to lend in and at what basis. The U.S. in general remains extremely undersupplied with housing across the board, and there is still a serious affordability problem in the country for new home purchases in terms of the average household income compared to the average home price. With that said, new construction across the country during the prime COVID years skyrocketed given favorable construction costs and historically low rates. This led to a wave of new supply in several areas. We believe overall housing fundamentals remain strong and the multifamily sector will thrive in high-demand areas as new supply is absorbed.

Tell us about a deal you’re especially proud of this past year. 

I would say 585 Kendall Street, a $683 million construction loan in Cambridge, Mass. This was a true team effort at SMBC and a fantastic transaction to lead and agent for Blackstone/BioMed Realty. State-of-the-art, new build, LEED Gold lab/office space pre-leased to Takeda Pharmaceuticals long term. Takeda, being a Japanese pharmaceutical firm, made the deal even more attractive given SMBC’s Japanese roots. The project has the potential to redefine the Cambridge life science landscape, and we look forward to seeing the final product.

Lightning Round:

AI: Helpful or fad?

The continued advancement of AI will be helpful in many areas, including data analysis, automation, and enhancing creativity and productivity. As long it is developed responsibly, we will see more integration in our lives. 

Celebrity you’re sometimes compared to?

Don’t laugh too hard:  Bruno Mars. 

Will interest rates be below or above 4 percent on July 1, 2025?

No crystal ball here, but I am going to just put my finger in the air and say “below.”

Pick a movie remake: “Beetlejuice” or “Twisters”?

“Beetlejuice.” Big fan of Tim Burton and his approach to filmmaking.

Modify or foreclose?

I don’t think any bank wants to willingly pursue a foreclosure on a well-capitalized institutional client. We are lending partners to them, and I will always choose to prudently and constructively work with clients on issues so long as we mutually understand that it has to be a two-way street.

Song title that encapsulates your current mindset?

“Heartz of Men” by 2Pac.

Dream dinner date?

For a historical figure, I would choose Leonardo Da Vinci. Artist, scientist and inventor. That would be a fascinating conversation.