Drew Fung and Thanh Bui 

Clarion Partners’ Drew Fung and Thanh Bui took a quality over quantity approach to financing in 2023.

Focusing on industrial and residential — especially garden-style, high-rise and build-to-rent (BTR) multifamily, covering development, refinancing and acquisition — Clarion originated $880 million over seven transactions with an approach that the company said reflected the industry’s current challenges and volatility. 

“Our Clarion Partners’ house view always called for an overweight to the industrial and multifamily sectors,” said Fung. “Also, the fact that quite a few other lenders — for example, banks — were on the sidelines [made us] able to participate in lending on a first-mortgage basis. We’re typically focused more on mezzanine and preferred equity — so subordinate debt — but market conditions being what they were, we were able to do a few senior mortgages, mostly on ground-up construction.”

Clarion’s 2023 transactions included taking a preferred equity position for two refinancings of BTR assets in the Phoenix and Tampa areas, where Freddie Mac was the senior lender; a high-rise bridge loan to refinance a 464-unit multifamily building with 35,000 square feet of ground-floor commercial space in Manhattan’s Midtown West; and a mezzanine loan to refinance construction financing for a multifamily development in Salt Lake City.

“We focused on a very high-quality sponsor,” said Fung about the Utah deal. “There is quite a bit of new supply scheduled to come online in that market, but the project we were able to lend on had a unique location with excellent access to transportation, and retail and recreational amenities. It was maybe 90 percent complete when we closed it, so there was still a bit of construction going on and leasing that had to happen. But I think they’ll be ahead of the game on some of the new supply that’s scheduled to come online.”

Given current market conditions, Clarion intends more of the same for 2024, sticking to familiar sectors while embracing the unique opportunities of the current economic era. “Our view is that there will continue to be rate volatility,” said Fung. “With that, we’ll need to continue to be conservative in our underwriting, and continue to focus on quality.”