Michael Lavipour

Describe the past 12 months in one word, then tell us the key lending opportunities you and your team have uncovered.

Active. Active on all fronts: capital raising, new deals, bank partnerships, and asset management successes. On the capital side, credit is a darling, and interest is coming from different types of institutions, specifically from those with a proven track record of returns and continued strong deployment in a transaction-light environment. On the deal side, we were nearly as active as we were in 2021, but at lower leverage levels and in many cases higher returns. We’re picking up the development opportunities that exist with the bank pullback and refinancing many 2021 vintage construction loans that no longer underwrite to bank standards. Our senior financing has become more diverse, too, as new banks and life insurance companies looked to enter the lender finance world. We spent time on setting up programmatic partnerships with banks that should bear fruit in 2025. And we realized a few of our earlier REOs with moderate success. The last year also created separation between the haves and the have-nots, and I expect to see some industry consolidation in 2025 as a result. 

How long will nonbank lenders continue to increase market share?

For the foreseeable future. The short term is clear: Deals done in 2021 and 2022 at bank leverage points don’t work for banks today based on adjusted rates and values. The medium term is also clear, but driven by structural changes: Banks are being set up to be more capital efficient by lending to nonbank lenders than by lending directly, largely due to capital charges tied to Basel III. This is true across private credit broadly but specifically in commercial real estate — it’s why you’re starting to see partnerships or JVs with banks and private capital across the industry. They take different forms but the goals are the same, and it’s a healthy shift for the industry at large. 

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

2025 should bring relief off the bottom on the valuation side, which should allow banks to transact and take advantage of buyer optimism associated with rate cuts and an improving market broadly. Recent pools brought to market have been met with great success on the sellerside, so I’d expect to see more of it early in 2025.

Tougher market: GFC or these past four years?

The past four years, partly because in the GFC I was a vice president at a bank and now I lead a business, but mainly because the GFC was based on a singular problem of over-leverage with a singular solution of lowering rates. The markets fell sharply and rebounded quickly. Here there have been many more intertwining factors that have presented a more complex market: the pandemic, inflation, rate adjustments, different ways to use real estate, corporate spending adjustments, office, etc. But the market today also presents more opportunities for those who can see through it as a result. 

Who lent you your very first buck, and what was it for?

In life, probably my parents. At Affinius, MetLife was the first group to provide us leverage for our first facility to get the business started. We continue to reward them to this day for that. 

Have you taken any keys back this year? Wanna talk about it?

Not in 2024, but a handful in 2023. Most shared a similar profile: value-add office loans made before the pandemic with consensual transfers. Some we plan to reinvest into, and others we plan to liquidate when markets recover.  

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

I really liked the Sven transaction for the Durst Organization: preferred equity on a large-scale ($100 million-plus investment) asset in New York, opening up a new relationship with a counterparty that our business couldn’t have touched five years ago. Working with Wells Fargo on the senior side in a SASB transaction was a great process too. 

Lightning Round:

If I could lend money to one person in the world, it would be…

Anyone who will pay me back, preferably not too quickly.

AI: Helpful or fad?

Helpful.

Celebrity you’re sometimes compared to?

Novak Djokovic. 

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

Below.

Who will win the presidential election (not who you want to win)?

Kamala Harris.

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

“Beetlejuice.”

Modify or foreclose?

Modify if possible; foreclose if you have to.

Class B office: Tear down and start over, or convert?

Convert in New York. Tear down and start over most other places. 

Dream dinner date?

1990s Knicks team with my childhood friends.